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RBF Annual Report 2010–11

Retirement Benefits Fund Annual Report 2010–11

Retirement Benefits Fund 2010–11

Fortieth Annual Report of the Retirement Benefits Fund Board

for the year ended 30 June 2011

October 2011

Hon Lara Giddings MP

Treasurer and Premier

Parliament House

HOBART TAS 7000

Dear Treasurer

Pursuant to Regulation 19 of the regulations made under the Retirement Benefits Act 1993 (the Act),

the Retirement Benefits Fund (RBF) Board is pleased to submit its report on the exercise of its powers

and functions under the Act for the financial year ended 30 June 2011.

The Annual Report incorporates a copy of the Financial Statements prepared by the RBF Board for the

relevant period.

Yours sincerely

Damian Egan

PRESIDENT

i Retirement Benefits Fund – Annual Report 2010–11

1 Report purpose 2

2 Retirement Benefits Fund 3

3 Board Members 8

4 Highlights 2010–11 10

5 RBF organisational structure 13

6 RBF administration 14

7 Investment performance 23

8 Funds Under Management (FUM) 34

9 Legislation and policy 36

10 Member review statistics 37

11 Schemes, accounts and products 38

12 RBF membership benefits 45

13 Keeping members informed 48

14 Financial statements for the year ended 30 June 2011 51

Appendices

Appendix A – Additional financial instruments disclosures 123

Appendix B – Independent Audit Report 134

Appendix C – AAS 25 Financial Reporting 136

Appendix D – Investment Managers 154

Appendix E – Individual agency balance sheet results 155

Table of contents

On the coverSonja (Nurse Unit Manager), RBF member

Retirement Benefits Fund – Annual Report 2010–11 1

The purpose of this report is to inform Members of Parliament about the administration and operations of the Retirement Benefits Fund (RBF) for the period 1 July 2010 to 30 June 2011. The report explains how the Retirement Benefits Fund Board (the RBF Board) delivered superannuation benefits and services to members.

Compliance with Heads of Government AgreementThe Tasmanian Government is a signatory to a Heads of Government Agreement between the Commonwealth and all State Governments. This Agreement provides exemption for certain public sector superannuation schemes from the provisions of the Superannuation Industry (Supervision) Act 1993 (SIS). However, the Agreement provides that Exempt Public Sector Superannuation Schemes must comply with the principles of SIS and are to be regarded as ‘complying funds’ for Commonwealth taxation purposes. The requirement (to comply with SIS) is also incorporated into the governing rules of the Retirement Benefits Fund. One of the RBF Board’s principal strategic objectives is to achieve exemplary corporate governance. Ongoing performance by RBF against all RBF Board strategies is monitored via regular performance reporting to the RBF Board and to the Treasurer.

The RBF Board has implemented a comprehensive compliance program, part of which identifies the legislative requirements that must be adhered to by RBF, including SIS, and provides for a positive attestation to adherence and monitoring of actual adherence. In addition, the RBF Board has implemented an ongoing Internal Audit Program that is controlled under the direction of the Risk and Audit Committee of the RBF Board. The reviews undertaken under the Internal Audit Program include review of RBF practices against both legislative requirements and industry best practice.

Each year, the Tasmanian Auditor- General undertakes a compliance audit of the RBF Board’s activities consistent with the requirements of the Superannuation Industry (Supervision) Act 1993. The RBF Board has provided the Tasmanian Auditor-General with Financial Statements relating to its operations for the 2010-11 financial year in compliance with the requirements of the Heads of Government Agreement. The RBF Board is complying with its legal obligations in submitting this report.

1

Report purpose

2 Retirement Benefits Fund – Annual Report 2010–11

The RBF Board administers the Retirement Benefits Fund (the Fund) on behalf of members. The RBF Board must comply with the relevant legislation and act in the best interests of the Fund, its members and the State. It fulfils its duties by developing valued relationships with members and key stakeholders such as the State Government. The focus of the RBF Board is high-level policy and strategy. For a matter to be approved by the RBF Board, it must be supported by two-thirds of the voting members at a meeting. The President may only exercise a casting vote in certain circumstances.

Duty of the RBF BoardThe duty of the RBF Board is to provide benefits on retirement for present and future members, their spouses and dependants. This is achieved by receiving employer and member contributions and the prudent oversight of investments. The RBF Board strives to ensure that its obligations to both the State Government and RBF members are met efficiently and cost effectively, while complying with its fiduciary and statutory duties.

Statement of Corporate IntentThis Statement of Corporate Intent has been prepared pursuant to Regulation 18 of the Retirement Benefits Regulations 2005.

The Statement represents a summary of the RBF Board’s Strategic Plan for 2011–2015 prepared in accordance with Regulation 16 of the Retirement Benefits Regulations 2005.

Business definitionThe RBF Board manages superannuation schemes in accordance with the Retirement Benefits Act 1993, the Retirement Benefits Regulations 2005, the Retirement Benefits (Parliamentary Superannuation) Regulations 2002, the Public Sector Superannuation Reform Act 1999, the Tasmanian Accumulation Scheme Trust Deed, and any other applicable law of the State or the Commonwealth. The Retirement Benefits Fund is an Exempt Public Sector Superannuation Scheme for the purposes of the Commonwealth’s Superannuation Industry (Supervision) Act 1993, but complies with the spirit and intent of that Act.

The core business of the RBF Board is the provision of retirement and ancillary benefits for members and their spouses.

Some key facts about RBF as at 30 June 2011:

It manages a superannuation fund for some 35,800 employees, 9,400 pensioners and 41,700 former public sector employees.

It has a full range of superannuation and retirement products, i.e. defined benefits schemes, accumulation scheme, life pensions, allocated pensions, Member Investment Choice, death and disability cover and investment, spouse and preservation accounts.

It invests approximately $3.8 billion of members’ funds and, through its investment management role, has a major influence over the State’s accrued unfunded superannuation liabilities.

It employs 155 staff, located in Hobart and Launceston.

It operates in a competitive ‘choice of fund’ environment but is limited in its activities to current and former Tasmanian public sector employees and their spouses.

Key result areasThrough the strategic planning process, the RBF Board has identified four areas that require key outcomes to be delivered for the ongoing success of the business across the corporate and strategic planning horizons:

1 Viability: Obtaining a Funds Under Management (FUM) scale that enables us to be an effective and efficient fund into the future

2 People: Having the right workforce and culture to deliver sustainable value to our members and stakeholders

3 Governance: Delivering consistent management, cohesive policies, processes and decisions that commercially enable our workforce and manage our risks appropriately and

4 Infrastructure, Information and Systems: Providing infrastructure, information and systems that enable staff to efficiently and effectively deliver value.

These four areas are interdependent. The RBF Board must work cohesively to ensure progress in each of these areas to ensure ongoing success.

Shaun (Prison Officer), RBF member

2

Retirement Benefits Fund


Strategic objectives with supporting goalsFrom the four key result areas, seven strategic objectives and eighteen underlying goals have been established with quantitatively measurable performance targets across the four years of the corporate planning period:

Reference Number

Description

SO1 To grow funds under management (FUM) to $6 billion by June 2015

G1.1 To reduce the number of controllable lump sum funds exiting annually from 2012-13

G1.2 To increase new funds inflow year on year to $227 million annually by June 2015

G1.3 To partner with the State Government in decreasing the Defined Benefit (DB) schemes' unfunded liability

G1.4 To obtain $83 million of external Superannuation Guarantee and roll-in FUM from former public sector employees and spouses by June 2015

SO2 To be the preferred default fund for all of our employer sponsors

G2.1 To regain and retain 100% of preferred default status

G2.2 To increase the proportion of public sector employees choosing RBF

G2.3 To have HR and employers advocating RBF as the preferred superannuation fund

G2.4 To have unions advocating RBF as the preferred superannuation fund

SO3 To improve our member advocacy score year on year

G3.1 To deliver services that satisfy our members’ needs

G3.2 To improve our products suite to meet our members’ life stage goals

G3.3 To increase RBF member numbers

SO4 To meet our investment objectives throughout each year by active management

G4.1 To offer (Tasmanian Accumulation Scheme) investment products that deliver quartile performance results in up and down markets and the long term

G4.2 To reduce the DB schemes’ unfunded liability by actively managing fund investments

SO5 An environment that champions the continual development of our people, performance and culture by June 2012

G5.1 To develop a high-performance culture that lives our values, achieves our goals and celebrates our successes

G5.2 To attract, develop and retain the best people to align with our organisational needs

SO6 Federal regulatory standards of governance met by July 2012

G6.1 To obtain Registrable Superannuation Entity (RSE) license by July 2012

SO7To achieve scalable systems and infrastructure to enable the continuing expansion of products and services to members

G7.1 To outsource fund transactional administration by 30 June 2011 – on page 11 we set out how we reached this target

G7.2 To reduce the DB schemes' administrative cost to $17.9 million per annum

Supporting explanations:

SO1 Increasing funds inflow

This strategic objective focuses on what RBF can do more directly to influence an increase in funds inflows while reducing funds outflows. The 2010-11 actual for net flows was under target. This was due to the 2009-10 actual being substantially impacted by a number of State Fire Commission Superannuation Scheme exits totalling $28 million.

Net Rollover Performance has improved in the past twelve months, but still remains negative. Research into member rollover behaviour continues to indicate that the main reasons for rolling money out of RBF are the lack of portability for employer Superannuation Guarantee (SG) contributions and a lack of member education about RBF products and benefits. Priority is being placed on responding when a Letter of Authority (LOA) is received by contacting the member to ensure retention of funds under threat of rollout.

SO2 Continuing to develop our workforce

Significant focus and resourcing was applied to the human resources and learning and development areas of the business during 2010-11. This will continue during 2011-12. With the transition of responsibility for member administration to Mercer and work in support of obtaining RSE licensing, significant change is occurring for the organisation. Regular monitoring of absenteeism and employee ‘pulse checks’ had stabilised employee absenteeism and staff turnover in the December quarter of 2010, however since then staff turnover has increased. Support mechanisms are in place to ensure this transition period for RBF is as smooth as possible.


SO3 Achieving target member participation

Further work on the measures under this objective is required, although existing measures are still tracking performance in these areas.

The Net Promoter Score (NPS) is considered a good indicator of member advocacy – that is whether a member would recommend RBF as their preferred fund. This should ultimately assist RBF in increasing funds under management. NPS surveys are completed on an ongoing operational basis by applying a brief survey to a sample of members who have had a recent service experience as well as further surveys on a broader section of our membership through RBF’s participation in the Fund Executives Association Limited (FEAL) group’s work. RBF’s drop in the overall FEAL survey result for this year is explained by a differing sample group and potentially reduced confidence in superannuation generally as a result of the uncertainty generated by many industry reviews and post-global financial crisis issues.

The majority of performance objectives for RBF investment products have a five-year horizon. Whilst equity markets have performed well recently, this has been offset somewhat by the subsequent flow-on effect of the global financial crisis sentiment into unlisted and infrastructure assets category valuations. It will possibly take two to four years for absolute returns to achieve the targets identified here. The below graph indicates the main defined contributions products’ relative performance over the past three years.

It is never too early to think about the future, and I feel very assured knowing that RBF are doing all they can to secure mine.Emily (Teacher), RBF member

Diversified MIC Options Rolling Relative Performance vs Objectives

Whilst the comparison of performance against objectives is stark, the following market comparison reaffirms the value RBF offers to its members and our positioning of RBF offering ‘financial peace of mind’ for our members:

RBF Actively Managed vs. SuperRatings Survey 31 May 2011

RBF Diversified Options

% Growth Assets

1 Year 3 Years pa

5 Years pa

7 Years pa

10 Years pa

RBF Actively Managed SuperRatings Balanced Option (Median) Quartile Ranking

75% 60-76

7.0% 7.8%

3

0.6% 0.1%

2

3.0% 2.6%

2

5.9% 5.8%

2

5.6% 5.0%

1

SuperRatings Default Option (Median) Quartile Ranking

8.0% 4

0.1% 2

2.8% 2

6.0% 3

5.1% 2

Note: The above external comparison is provided for reference. The only product for which RBF considers positioning relative to external providers when developing the investment strategy is RBF Actively Managed.

SO4 To reduce DB schemes’ cost impact on the State Government

In last year’s corporate plan, RBF identified a specific objective to aid the identification of value being delivered for the State Government. Further development is continuing to refine these measures in order to demonstrate that value.

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

Sep

-07

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-07

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08

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09

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urn

RBF Long Term Growth (87/13)RBF Socially Responsible

RBF Conservative Growth (28/72)RBF Actively Managed (75/25)


The following graph indicates the relative performance of the main DB schemes over the past three years. It is unlikely returns will exceed the benchmark measure for the next four years until the GFC returns exit from the rolling five year calculation.

Defined Benefit Schemes Relative Rolling Return vs Objective

SO5 To be the preferred default fund for all of our employer sponsors

In developing the 2011–15 Strategic Plan, RBF has identified the importance of our default fund status to our funds inflow. RBF is working on an appropriate measure of the number of employer sponsors for which it is the preferred default fund.

Preferred default fund status means the employer provides for RBF as the super fund of choice in industrial agreements with its staff.

The employer NPS survey has been run for 2010–11. The latest result of -40 was disappointing but not entirely unexpected. With the introduction of the Mercer Spectrum product it is anticipated that there will be a strong improvement in this result for 2011–12.

SO6 Federal regulatory standards of government by July 2012

RBF has continued to make good progress towards meeting the requirements of obtaining a RSE licence.

SO7 To achieve scalable systems and infrastructure to enable the continuing expansion of products and services to members

The focus of this strategic objective has been the outsourcing of the Fund’s administration. More information on this can be found on pages 11 and 21.

CommitteesTo assist in the efficient operation of the Fund, the RBF Board approved a Governance Framework with application from 1 July 2010 which established the following Committee structure:

Investment Committee

Risk and Audit Committee

Administration and Remuneration Committee.

These Committees have the power to make decisions and recommendations to the RBF Board on policy.

The objective of the Investment Committee is to provide independent assurance and assistance to the RBF Board on the Fund’s investments.

The objective of the Risk and Audit Committee is to provide independent assurance and assistance to the RBF Board on RBF’s risk, control and compliance framework.

The primary objective of the Administration and Remuneration Committee is to provide independent assurance and assistance to the RBF Board on its oversight responsibility for operational matters not otherwise covered by the Investment Committee or Risk and Audit Committee.

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PRBF and PSFContributory Scheme

RBF has assisted me in making sure I am on the right track with my savings for retirement and income protection.Aaron (Bus Driver), RBF member


The constitution of the Committees as at 30 June 2011 was as follows:

Investment Committee

Risk and Audit Committee

Administration and Remuneration Committee

Members Damian Egan (Chair) John Harman Neroli Ellis Lindsay Jones

John Wilcox (Chair) Elizabeth Thomas Don Challen

Don Challen (Chair) Elizabeth Thomas John Wilcox

Quorum members Three (two of whom must be RBF Board Members). If vote tied, matter to be referred to full RBF Board.

Two (both must be voting members). If vote tied, matter to be referred to full RBF Board.

Two (both must be voting members). If vote tied, matter to be referred to full RBF Board.

Chantal (Registered Nurse) and Sarah (Registered Nurse), RBF members

RBF Board Conflicts of Interest PolicyThe identification and management of actual, potential and perceived conflicts of interest is an important responsibility that the RBF Board takes seriously. The proper management of conflicts is important to ensure that the quality and integrity of services provided by RBF to its members is not compromised by conflicts of interest and that members are treated fairly.

The RBF Board has implemented a Conflicts of Interest Policy to allow Board Members to deal with conflict of interest. The RBF Board’s Conflicts of Interest Policy requires all stakeholders, which includes members of the Board and its officers, employees and representatives, to identify, avoid where possible, manage and/or disclose any actual, potential or perceived conflicts of interest so that no stakeholder achieves an unfair advantage. Details of disclosure of a conflict of interest and any subsequent action taken, are recorded in the meeting minutes.


The Governor of Tasmania appoints the members of the RBF Board. The RBF Board is the Trustee of the Fund. The names of the Board Members who held office as at 30 June 2011 are below.

Damian EganPresident of the RBF Board (non-voting)

Nominee of the Minister, with the agreement of the Tasmanian Trades and Labor Council (now operating as Unions Tasmania)

Relevant Term: 4/09/2009 – 3/09/2012

Board Member since 1995 and President since 1996

Chair of the Investment Committee, a Director of 66-80 Collins Street Pty Ltd, a Director of RBF Property Pty Ltd and a Director of the Tasmanian Gateway Corporation Group of companies which owns Hobart International Airport.

Mr Egan is a partner in the legal firm Murdoch Clarke, a member of the Federal Government Corporations and Markets Advisory Legal Committee, and a Board Member of the Hobart City Mission Inc and several private companies.

Don ChallenDeputy President of the Board

Nominee of the Minister

Relevant Term: 1/11/2010 – 31/10/2013

Chair of the Administration and Remuneration Committee and Member of the Risk and Audit Committee.

Mr Challen is an economist, specialising in public finance. His early career as an academic was followed by 25 years in the public sector including an extended period as Secretary of the Department of Treasury and Finance in Tasmania.

John WilcoxNominee of the Minister

Relevant Term: 1/10/2009 – 3/09/2012

Chair of the Risk and Audit Committee and Member of the Administration and Remuneration Committee.

Mr Wilcox is a semi-retired Chartered Accountant.

Elizabeth ThomasNominee of the Minister

Relevant Term: 4/09/2009 – 3/09/2012

Member of the Administration and Remuneration Committee and Risk and Audit Committee.

Ms Thomas is an independent business consultant, specialising in corporate governance, organisational development and strategic planning.

Lindsay JonesNominee of the Tasmanian Trades and Labor Council (now operating as Unions Tasmania)

Relevant Term: 1/09/2010 – 31/08/2013

Member of the Investment Committee.

Mr Jones is the Tasmanian Branch Vice President of the CPSU (SPSFT) and is semi-retired.

Neroli EllisElected by members of the Contributory Scheme

Relevant Term: 1/09/2010 – 31/08/2013

Member of the Investment Committee.

Ms Ellis is the Branch Secretary of the Tasmanian Branch of the Australian Nursing Federation.

John HarmanElected by members of the Tasmanian Accumulation Scheme

Relevant Term: 1/09/2010 – 31/08/2013

Member of the Investment Committee and Chairman of RBF Financial Planning Pty Ltd.

Mr Harman is a semi-retired superannuation industry specialist with approximately 39 years’ experience in the superannuation and finance industries.

Philip Mussared Chief Executive Officer

As CEO, Mr Mussared has statutory responsibility for the general management of the RBF Board’s investment and administration operations. He attends all RBF Board meetings and is also a Director of RBF Financial Planning Pty Ltd, 66-80 Collins Street Pty Ltd, RBF Property Pty Ltd and Tasmanian Gateway Corporation Group of companies which owns Hobart International Airport.

Liability risk managementThe RBF Board provided Directors and Officers liability insurance cover for the 2010–11 financial year.

RBF Board protocolThe RBF Board has reviewed and updated their protocol to ensure contemporary practices are embedded into the corporate governance practices of the RBF Board.

3

Board members


Members’ attendance at meetings1 July 2010 – 30 June 2011

Board /committee

Ordinary Board meetings

Special Board meetings

Investment Committee meetings

Risk and Audit Committee meetings

Administration and Remuneration Committee meetings

Special Committee

Meetings eligible to attend

Meetings attended


Meetings attended


Meetings attended


Meetings attended


Meetings attended


Meetings attended

Member attendance at meetings

D Egan 12 10 1 1 13 12 0 0 0 0 23 2

D Challen2 8 8 0 0 0 0 3 3 3 3 13 1

N Ellis 12 9 1 1 13 9 0 0 0 0 0 0

L Jones 12 12 1 1 13 12 0 0 0 0 23 2

J Wilcox 12 11 1 1 0 0 5 5 5 5 13 1

J Harman 12 10 1 0 13 12 0 0 0 0 13 1

E Thomas 12 10 1 1 0 0 5 4 5 3 13 1

A Schiwy1 4 3 1 0 0 0 0 0 2 2 0 0

CEO attendance at meetings

P Mussared 12 12 1 1 13 13 5 5 5 5 0 0

Notes:1 A Schiwy ceased to be a Board Member on 1 November 2010.2 D Challen commenced as a Board Member on 1 November 2010, replacing A Schiwy.3 Two Special Committees were appointed for the purpose of natural justice hearings:

Committee 1: D Egan (Chair), D Challen, J Harman and L Jones. Committee 2: D Egan (Chair), E Thomas, L Jones and J Wilcox.

RBF look after you from the moment you walk in the door.Josh (Electrician), RBF member


About the Chief Operations OfficerMr Nick Connor was appointed as the Chief Operations Officer on 4 January 2011.

Nick is a highly respected executive with over 20 years’ management experience in the Tasmanian financial services industry. He is an active member of the Tasmanian business community and has served as a director on various boards, including as an inaugural director of RBF-TAS Planning (now RBF Financial Planning Pty Ltd).

Nick holds Certified Financial Planner status with the Financial Planning Association, has a Bachelor of Education and Masters of Business Administration from the University of Tasmania, and is a Fellow of the Australian Institute of Company Directors (AICD).

Nick is well known in yachting circles and has represented Australia on three occasions, winning both World and Australian titles. As a committee member of the Sandy Bay Sailing Club, Nick now spends his Saturdays coaching young members in racing techniques.

He is also the Director of the Tasmanian Community Foundation, a philanthropic organisation that assists in supporting projects within the Tasmanian community.

Now that Nick has joined the RBF team, his priority is to ensure that the new RBF is operationally structured to be an efficient and responsive member-focused organisation. The task of defining our new ‘Future State’ and developing an integrated Operations Business Plan are his first priorities in pursuit of these goals.

About the Chief Investments OfficerDr Ian Lundy was appointed as the Chief Investments Officer on 15 March 2011.

Ian’s expertise will see him work with RBF’s Investment Committee and Investment Management Division to implement the investment strategy for RBF members. His number one priority is to attain the best risk-adjusted returns in order to optimise investment outcomes for RBF members.

Ian started in the investment industry in 1996 and joins RBF from Forte Investment Advisors in Melbourne, a niche consulting firm he established and managed from 2005 to 2009 where his particular focus was on Asian equity managers and hedge funds. He consulted to microcap manager Acorn Capital in 2010.

Ian holds a BSc (Hons) in Statistics and PhD in Applied Mathematics and is currently studying towards an Executive MBA at the Australian Graduate School of Management.

The new RBF cultureWith the arrival of our new CEO in 2010, a fresh approach has been brought to RBF with increased focus on service improvements and a culture of continuous improvement.

New key management appointments and internal restructuring has aligned the organisation toward a membership-focused business model with increased transparency and efficiency.

A dedicated team of knowledge and training professionals has supported the organisation’s drive toward a service excellence culture. This has been further supported by targeted cultural change programs that commenced during 2010-11 which have delivered a sense of purpose for staff and help ensure RBF’s status as a future employer of choice.

It’s essential to gain superannuation information and advice leading up to your retirement. RBF Financial Planning provided me with valuable retirement planning advice. They can then organise a personal interview, no matter where you are in the state.Robin (Retiree), RBF member

4

Highlights 2010–11


OutsourcingAt RBF, we are working hard to continuously improve our services to members. We are focussed on developing products that are of value to members and which will improve our long term competitiveness through being able to maintain lower costs.

On 28 April 2010, the RBF Board approved a detailed submission recommending the decision to partner with Mercer (Australia) Pty Ltd, the broad parameters of the members’ administration and external communication services to be outsourced to Mercer and a timetable to achieve transition to Mercer by 30 June 2011. On 30 April 2010, the President of the RBF Board and the RBF CEO addressed a meeting of all RBF staff to inform them of the impending changes and an extensive communications plan was initiated.

In response to the RBF Board’s decision, an Outsourcing Project was established with the objective ‘To transition the administration services from RBF to Mercer (Australia) Pty Ltd before 30 June 2011’. Mr Tim Baker was appointed Program Manager for the project.

The Outsourcing Project was designed in two phases.

Phase 1 – Planning and Design - partially completed at June 2010

Phase 2 – Operational Installation - five stages, due for completion of the Transition Stage before 30 June 2011 and full completion by June 2012

Stage 1 - Initiation Stage

Stage 2 - Detailed Design, Configuration and Transition

Stage 3 - Transition Stage

Stage 4 - Project Closure

Stage 5 - Outcome Realisation.

The decision to outsource member administration services to an external service provider posed significant change management challenges for both RBF staff and members. The Outsourcing Project was not only required to ensure that this complex task was achieved on time, on budget,

to the highest level of quality and to be relatively seamless to the RBF membership, but also to ensure that the reputation of RBF as the Tasmanian Government’s superannuation fund was maintained.

The RBF Board recognised that the success of the Outsourcing Project was critical to addressing a number of serious weaknesses in the competitive position of RBF and securing RBF’s future sustainability. As a consequence, the RBF Board committed sufficient resources to ensure an experienced and well resourced project team could be established to achieve the project outcomes. A qualified team was recruited, supported by specialist staff and consultants, and this had a significant impact on ensuring that the key objective of the project was achieved.

It is considered a credit to all involved that the Outsourcing Project team not only met the challenging objective of transition of administration services from RBF to Mercer before 30 June 2011, but also achieved this within acceptable risk tolerances and within budget. Further information on the Outsourcing project is provided on page 21.

The relationship between Mercer and RBF is documented in a detailed Agreement and agreed performance targets are documented in supporting schedules. Mercer must perform to those targets and will be accountable to the RBF Board.

Wayne (Transport Inspector), RBF member


Business Relationship Officers in the fieldRBF remains committed to providing flexible, professional and personal services to our membership. Our goal is to help members achieve lifetime financial peace of mind by taking care of their superannuation and financial planning needs.

Our Marketing and Communications Unit has continued to develop workplace services via our dedicated Business Relationship Officers (BROs). The BROs are knowledgeable and experienced professionals who bring RBF to workplaces across Tasmania.

As well as attending numerous workplaces, in 2010–11, the BROs attended conferences and trade shows including:

Australian Nursing Federation

Annual Delegates Conference

Financial Literacy for Women and Retirement Seminars

Australian Education Union

West Coast Personal Development Day

Representatives Annual Conference 2010

Support Staff Annual Conference 2010

New Educators Conference 2010

Educational Psychologists Conference 2010

Financial Literacy Seminars

Representatives Training Program

Employee Safety Representatives Training Day

Community and Public Sector Union

Conferences in Devonport, Launceston and Hobart

Seminars around the state

Training for Organisers in Hobart

Department of Education School Psychologists Personal Development Forum

Regional Staff Training Days

Regional New Employees Induction Days

Regional Principals Meetings

Department of Justice

Induction Sessions

Department of Premier and Cabinet

New Employee Inductions

Department of Primary Industries, Parks, Water and the Environment

Workshops in Devonport, Launceston, New Town and Hobart

Forestry Tasmania

Redundancy Presentations

Health and Community Services Union

Annual Delegates Conference

Metro Tasmania

Seminars at Hobart, Launceston and Burnie

Police Association of Tasmania

Conference

Public Trustee

Seminars around the state

United Voice (previously Liquor Hospitality and Miscellaneous Union)

Tasmanian Fire Service

Workplace Forums

Tasmania Police

Graduation Ceremony

Leaders Convention

Induction Sessions

Tasmanian Principals Association

Annual Conference

Statewide Meetings

Tasmanian School Administrators Association

Annual Conference

TasRail

Seminars

The BROs also ran a number of question and answer sessions in workplaces all around Tasmania.

Louise Pybus, Phil Claxton and Stephen Hevey, RBF’s Business Relationship Officers


Chief Executive Officer (CEO)The Chief Executive Officer has statutory responsibility for managing RBF administration and implementing the strategic framework as determined by the RBF Board. The CEO has responsibility for working closely with the RBF Board to develop and implement strategies, policies and decisions in order to meet key challenges. The CEO is Secretary to the RBF Board and attends all RBF Board and Committee meetings, but is not a voting member. The CEO reports to the RBF Board through the President and heads a Leadership Group comprised of Division Managers and the Manager Strategy.

The CEO is responsible for the management of the RBF Board’s operations.

The primary functions of the CEO are outlined in the Retirement Benefits Regulations 2005. These include:

Fund administration

acting as the RBF Board’s delegate in administering the Retirement Benefits Act 1993; and

management of the organisation, directing research and development activities.

Leadership

developing corporate strategies and business plans;

liaising with key stakeholders and the superannuation industry; and

developing products and services.

Funds management and investments

contract supervision with respect to investment managers and asset consultants;

acting as the RBF Board’s delegate in cash-flow management and investments; and

supervising the integration of RBF’s financial, taxation, investment and liability management activities.

Leadership of DivisionsThe CEO provides leadership for the CEO’s Office which includes the Strategy and Board Secretariat functions.

The Strategy function works with the Board to determine the strategies and policies for the Fund. The CEO and divisional management implement those strategies and policies. The Strategy function also manages the planning alignment and performance reporting from management to the RBF Board and Board Committees.

The Board Support (Secretariat) function facilitates the effective interaction between the RBF Board, CEO and management. It coordinates all meetings, including agendas, papers, minutes and action items of the RBF Board, Board Committees and the Leadership Group. Board Support also manages communication, meeting schedules, training and conferences with Board Members.

A Division Manager heads up each of the four Divisions and two Project Teams.

The divisions and projects are:

Operations

Investment Management

Finance

Corporate Support

Outsourcing Project

RSE Licensing Project.

Board

Chief Executive Officer

Philip Mussared

Operations

Nick Connor


Ian Lundy

Finance

Anthony Bellamy

Corporate Support

John Mazengarb

Outsourcing Project

Tim Baker

RSE Licensing Project

Nina Nelson

Strategy

Mark Leis

The chart below illustrates the organisational structure at 30 June 2011.5

RBF organisational structure


Operations Division

Marketing and Communications UnitCommitment to RBF’s brand values of trust, reliability and integrity continued to guide marketing and communications activities during 2010–11.

The strengthening of stakeholder relationships remained central to RBF’s marketing strategy. As such, business relationships with employer and union stakeholders continued to be key to RBF delivering value to members and supporting the achievement of RBF’s strategic objectives.

Particular focus was toward delivery of quality service to members within public sector workplaces around Tasmania, consistent with providing lifetime financial peace of mind. This was supported with targeted marketing and communications initiatives using existing stakeholder channels.

RBF’s Business Relationship Officers (BROs) have been active participants, promoting RBF amongst employer and union stakeholders. This has included workplace visitation programs, educational forums, and targeted advertising and promotional opportunities arising from sponsorship arrangements with stakeholders. In this way, RBF continues to add value by reaching members and promoting the RBF brand in a targeted, cost effective manner and with efficient use of resources.

Non-relationship based marketing initiatives and promotional activities were condensed during 2010-11 as a result of preparing for implementation of the administration outsourcing project.

The Marketing and Communications Unit was restructured during 2010-11 to be encompassed within the newly formed Operations Division including a new Operations Management Team. The outcome of this is a much stronger collaboration amongst the Marketing and Communications, Member Solutions and Product Support Units. This will provide a clear path to improved service delivery and the maximisation of our competitive advantages, including established stakeholder networks, default status and specialised RBF-specific knowledge.

Product Support UnitThe newly formed Product Support Unit within the Operations Division fulfils three key roles:

1. to be responsible for the ongoing maintenance and development of our product suite to ensure that we provide the RBF membership with product and service solutions to maximise their superannuation and wealth outcomes;

2. to provide product-related support for those involved in delivering RBF products (both internally or through our outsourced provider); and

3. to be accountable for managing the day to day and strategic relationship with Mercer (Australia) Pty Ltd, our outsourced administration provider to ensure that we continue to provide a consistently high quality administrative service to RBF members in line with agreed service standards.

The key business functions now being performed within this unit include:

Business function

Description

Product and Services Development

Identify business options to develop contemporary and quality RBF products and services.

Ongoing evaluation and enhancement of existing products and services.

Product Policy Provide strategic and product technical advice on all aspects of product and member administration, including policy and process.

Product Support

Provide day to day support both internally and to our outsourced administration provider on specific member queries or transactions.

Handle preliminary decisions and other RBF Board/Trustee related delegations and decisions.

Outsourcing Relationship Management

Manage the outsourcing administration relationship with Mercer (Australia) Pty Ltd to ensure that the provision of services by Mercer comply with all our requirements including contractual, legislative, administrative and agreed member service levels.

Business functions which are now being performed by Mercer (Australia) Pty Ltd as our outsourced administration provider include:

member contact – Member Enquiry Line, correspondence etc

member account administration

early release and claims administration

benefit payments

pension administration

statutory publications and communications to members.

2010–11 has been predominantly focused on:

The efficient and effective handover of our administrative functions to our new administrator, Mercer (Australia) Pty Ltd, to ensure that this happens with as little impact on the members as possible.

The development of the Operations Division and creation of a Product Support Unit.

6

RBF administration


Member Solutions UnitThe role of the Member Solutions Unit is to help our members achieve their life-stage goals by providing valued financial services. The aim is to provide members with a customised, professional experience that helps them plan and manage their wealth creation and retirement.

Services are provided on a state-wide basis, with offices located in Hobart and Launceston, together with member interviews provided on request in Devonport, Burnie and other regional workplaces.

The continuing focus of Member Solutions is to educate and support members with their retirement savings planning as well as other related services such as investments, wealth accumulation, personal insurances and Centrelink issues.

Services are primarily delivered through personal contact with members at interviews held mainly at our offices.

Those Member Solutions staff who are Authorised Representatives of RBF Financial Planning Pty Ltd, a financial planning company owned by RBF, can provide personal financial advice to RBF members.

This Unit is responsible for the following business functions:

Business function

Description

RBF Superannuation Consultants

Educate and support members by providing RBF-only superannuation information and support through face to face services.

RBF Financial Planning Pty Ltd

Provide personal and general advice with ongoing review services to members through personal appointments and educational seminars.

During the year, Member Solutions provided the following services for members:

Personal appointments:

general product advice interviews;

personal advice appointments; and

statements of advice.

Counter enquiries:

general enquiries

assistance with paperwork.

The Member Contact Unit provided the following services to members, prior to the services being transferred to RBF’s new administrator, Mercer (Australia) Pty Ltd, on 29 April 2011:

Member queries:

all calls to RBF taken by Reception

general advice phone calls

correspondence.

The main focus for Member Solutions during 2010–11 has been:

Ongoing development of the skills and expertise of the team to provide value-adding services in the areas of member interviews and the provision of advice; and

Transitioning the member contact function consisting of phone calls and correspondence to RBF’s new administrator, Mercer (Australia) Pty Ltd.

RBF Financial Planning Pty Ltd (ABN 17 094 816 412, AFS Licence No 239171) is a wholly owned subsidiary of RBF and operates as a separate legal entity.

Jin (Electrical Engineer), RBF member


Investment Management DivisionThe role of the Investment Management Division is to manage RBF’s portfolio of investments (which totalled $3.86 billion at 30 June 2011) on a day to day basis such that the portfolio achieves an optimum return within an acceptable level of risk.

The Division is responsible for the following business functions:

Business function

Description

Investment products

Manage the investment portfolio in accordance with the investment strategy as determined by the RBF Board.

Provide information and advice to the RBF Board on issues such as:

RBF’s investment policy and strategy

asset allocation policy and asset class composition

selecting external investment managers

investment markets and economic conditions.

Directly undertake:

structuring Member Investment Choice options

calculating weekly investment returns for Member Investment Choice options

providing investment performance and comparison data

informing and educating Board Members, staff, RBF members and other stakeholders about investment markets and investment performance matters.

Internal funds management

Activities include:

sourcing and evaluating new direct investment opportunities

managing the existing portfolios of directly held property, mortgage and infrastructure investments in liaison with asset managers and other service providers.

The Investment Management Division has been deeply involved in the project to gain an RSE Licence from APRA during 2010-11 and this has led Investment Management to focus on upgrading internal systems and reviewing all internal procedures. Over time, these changes help to drive efficiencies across the investment processes to the benefit of members.

The Direct Investment Unit (part of the Investment Management Division) maintained its portfolios at equivalent levels in 2010–11 with a slight increase in the Direct Property portfolio. During the year, the Tasmanian property portfolio increased from $41.2m to $47.9m and mortgage investments decreased by $12.8m to $165.7m. The RBF Board purchased the Telstra Building at 66–80 Collins Street, Hobart in October 2010 and sold the Elizabeth Plaza building in Hobart in February 2011. In the direct mortgage portfolio, the team has worked hard to further diversify the portfolio, reducing risk to the overall portfolio posed by any large individual loans.

Finance Division The Finance Division became a stand alone Division effective from January 2011. Finance had formerly been a unit within Corporate Support.

The principal role of Finance is to manage the financial integrity, internal control and commerciality of the RBF organisation using contemporary practices in accounting, financial budgetary and taxation management. Together with the delivery of relevant and timely financial and management reporting this ensures effective financial support to the business, in order to optimise the financial and taxation outcomes for RBF and manage and implement all financial strategies.

In addition, during 2010–11, Finance has made significant contribution through the Finance and Treasury Workstream of the Outsourcing Project. The major component of these changes has been to the management of the daily treasury function with regard to contributions and debtor payments from agencies.

The General Ledger system has been upgraded to Version 11.9 to facilitate the new reporting requirements of both the Fund and the RBF Board.

As part of Finance’s role within the RSE Licensing Project, an RBF Tax Corporate Governance Policy, Charter and Tax Risk Management Plan is being finalised in preparation for RSE Licensing. Sound financial stewardship has contributed to in the RBF Board costs for 2010–2011 being below the approved budget.

Susan (School Executive Officer), RBF member


Corporate Support DivisionThe Corporate Support Division provides infrastructure support services to RBF.

The Division is responsible for the following business functions:

Business function Description

Program Management Office

The role of the Program Management Office (PMO) is to provide a structured approach to the assessment, design and delivery of business change that meets business priorities and needs.

The PMO has delivered 20 significant business changes during 2010–11; this has included merging of the RBF-TAS SG and RBF Investment Accounts to become the Investment Account, and allowing members to have the option of deducting funds from the Investment Account to pay RBF Financial Planning Pty Ltd for financial advice in relation to superannuation.

The PMO has also contributed significantly to the two major initiatives undertaken by RBF:

the Outsourcing Project, and

the Registrable Superannuation Entity (RSE) Licensing Project.

The PMO’s contribution to these initiatives, as well as to other business units, was made by providing specialist staff as needed and by identifying and documenting all new and changed processes as a result of the Outsourcing Project.

Information and Technology

This business function procures and manages all information and technology components, including managing contracts and relationships with external technology vendors. The most significant of these in the past has been the long-term partnering arrangement with Alphawest which supported the main administration platform, RBF’s Superannuation Administration System (RBFSAS). This system has now been retired with the transition to Mercer.

Human Resources Shaping and managing a people strategy aligned with RBF’s vision and corporate objectives is the responsibility of this function. It:

Builds capability and expertise within RBF through the design and delivery of innovative HR and people management initiatives that contribute to the achievement of organisation objectives.

Builds workforce capacity for RBF’s current and future requirements through organisational design, workforce planning and job design activities that prepare for current and future people challenges.

Provides processes for and support to managers to bring about change or reinforce employee behaviours where required.

Attracts, develops and retains high performing people.

Enhances safety and well-being in RBF’s work environment to contribute to high performance.

The major focus for this unit in the last year has been in ensuring RBF met its obligations to staff under the Staff Agreement and Fair Work Act 2009 through the separations that occurred during the transition to Mercer as an outsourced partner.

Knowledge and Training

The Knowledge and Training Unit guides and coordinates all RBF knowledge and training activity via the Strategic Training and Development Plan, which identifies RBF’s competency and development requirements and the approach to transition RBF into a learning organisation. This unit plays a critical role in our preparations for obtaining an RSE licence.

Organisational Change Identifying and managing the people impacts of change through levers such as communication, stakeholder management and resistance management is the responsibility of this function. It works closely with HR and Knowledge and Training to ensure holistic, organisation-wide people support.

Facilities and Service Desk

This business function provides appropriate premises and workplace requirements to enable staff to carry out their duties. This unit has supported the physical requirements to co-locate teams and projects as RBF has moved to its new structure and delivered the two key projects.

Information and Records

This business function provides an information management framework to capture corporate documents and records through the establishment of compliant record keeping and the creation of a knowledge sharing environment.

Mail Processing Collating, scanning and indexing incoming mail into our automated workflow system including initial data entry is the focus of this unit. This includes preparation of all outgoing mail, updating member’s electronic files with copies of all correspondence. This function has substantially reduced with transition of member related mail processing to Mercer.


In addition to normal operations, the Information, Technology and Facilities Unit upgraded RBF’s network infrastructure to ensure its continuing reliability and implemented a Service Desk solution to log, track and resolve service requests. The IT Disaster Recovery Plan continues to be tested on an annual basis. The Information, Technology and Facilities Unit worked closely with the business units to develop, test and implement system changes to satisfy legislative and business requirements.

The Knowledge and Training Unit has developed a Strategic Training and Development Plan to transition RBF into a learning organisation to facilitate cultural change; the end goal being, appropriately skilled, professional and compliant individuals.

Our staff

Having the right culture and workforce to deliver sustainable value to our members and stakeholdersRBF’s aim is to provide a positive working environment that is safe, productive and rewarding. In seeking to make RBF an accredited ‘Best Employer’, we strive to develop a positive, high-performance culture that is personally and professionally rewarding and ensures that the service we provide is of value to our members.

How does this contribute to a sustainable superannuation fund?

A team of highly trained and motivated people is essential to meeting the needs of RBF’s members and employers. Our superannuation plans and services are only as good as the people who develop, manage and deliver them. RBF offers a range of professional development opportunities, including accredited learning. This results in positive outcomes for our employees, their families and RBF.

Safe workplaceRBF is committed to providing a safe and healthy work environment for its employees.

A number of activities were undertaken in 2010–11 to maintain a safe working environment. These included a range of health and wellbeing activities for employees, including:

optional free influenza vaccinations for employees with a 34% staff participation rate;

ergonomic assessments for employees; and

an Employee Assistance Program that provides professional counselling and support services for employees and their families.

Staffing statisticsThe table below shows the number of staff employed as at 30 June 2011.

Division Employment Arrangement Male Female Total

Contract Permanent Fixed Term

Casual / Agency

Temporary

Office of Chief Executive Officer

1 3 2 0 2 4 6

Operations 1 48 1 1 20 31 51

Finance 1 10 3 0 4 10 14

Corporate Support

1 21 4 8 17 17 34


1 7 1 1 9 1 10

Outsourcing Project

1 15 3 8 11 16 27

RSE Licensing Project

1 4 8 0 6 7 13

Total 7 107 22 19 69 86 155

The staffing statistics in the above table include employees absent on paid or unpaid leave. The number of people employed with RBF was reduced by 21 in 2010-11 following a planned review of RBF’s workforce needs arising from the outsourcing of RBF’s administration services to Mercer (Australia) Pty. Ltd. The end of year turnover rate decreased by 2.5% from the previous year. The proportion of employees employed on a permanent basis, either full-time or part-time, increased in 2010-11 to 83% when taking into account the proportion of casual/agency temporary staff. The overall gender balance at RBF is 55% female and 45% male.


Employment arrangementsThe Retirement Benefits Fund Board Staff Agreement 2010–2012, approved by Fair Work Australia effective 10 August 2010, continues in operation until 30 June 2012. The Staff Agreement provides employment terms and conditions for staff employed with the RBF Board on either a permanent, fixed term or casual basis. Agency staff are engaged for additional temporary support as required. Division Managers are employed pursuant to terms and conditions outlined in common law Contracts of Service. Negotiations for the next Staff Agreement 2012–2015 will commence in late 2011.

Nu

mb

er o

f E

mp

loye

es

Age (years)

Female

Male

0

2

4

6

8

10

12

14

16

18

20

22

24

26

28

30

32

Up to 24 55 plus25-34 35-44 45-54

The employee age profile

The Workplace Service Program session was most valuable and provided me with information to fully maximise my RBF entitlements.Steven (Principal), RBF member


RemunerationThe remuneration of Board Members is determined by the Minister responsible for the Retirement Benefits Act 1993 (the Treasurer), in accordance with Tasmanian Government policy on the remuneration of Board members of government entities.

RBF staff remuneration is set under the Retirement Benefits Fund Board Staff Agreement 2010–2012. The Agreement negotiations took into account the market rates for superannuation funds and conservative financial services organisations, market remuneration data and movements and forecasts provided by independent remuneration consultants.

The remuneration of the Chief Executive Officer is determined by the Minister responsible for the Retirement Benefits Act 1993 (the Treasurer). Remuneration for senior management is based on market remuneration data provided by The Hay Group. Senior management remuneration is determined by the Chief Executive Officer in consultation with the Administration and Remuneration Committee of the Board. ‘Senior management’ encompasses the six Divisional Managers reporting to the Chief Executive Officer.

Compensation of Board Members

The number of Board Members and their total remuneration during the reporting period is shown in the table below.

Income Band Total Remuneration

Number

$30,000 to $34,999 6

$35,000 to $69,999 0

$70,000 plus 1

Total numbers 7

Total amount $306,794

Compensation of Senior Management

The number of executive officers in key senior management positions (includes the Chief Executive Officer) and their total remuneration during the reporting period is shown in the table below.

Income Band Total Remuneration

Number

$140,000 to $169,999 3

$170,000 to $199,999 3

$200,000 plus 1

Total numbers 7

Total amount $1,270,000

Workers’ compensationRBF commenced the year with one open claim for workers’ compensation. Two new claims were received during the year. One claim was resolved during the year, leaving two open claims as at 30 June 2011.

2009–10 2010–11

Cases carried forward on 1 July 3 1

New cases – 2

Cases resolved during the year 2 1

Cases active as at 30 June 1 2

Working days lost during year 5 68

Commonwealth Superannuation Guarantee complianceThe Retirement Benefits Fund Board declares that, as an employer, all obligations under the Commonwealth’s Superannuation Guarantee (Administration) Act 1992 have been met.

Debbie (Senior Personnel Officer), RBF member


Training and development The figures below show the number of study programs staff participated in during the year. The term ‘study’ is defined as tertiary or vocational level qualifications.

Areas of study undertaken 2010–11 Number of staff

Certificate and Diploma courses 3

Introductory Superannuation (including RG 146 etc) 19

Diploma of Financial Services (Financial Planning) 6

Diploma of Financial Services (Superannuation) 2

Advanced Diploma of Financial Services (Superannuation) 3

Graduate and Post Graduate courses 4

Accounting, CPA 3

Bachelor Degree 1

RG 146 Professional Development 3

RBF has a Strategic Training and Development Plan aimed at positioning RBF as a learning organisation. Its training and development focus follows five main streams:

Compliance;

Business;

Technical;

People development (management and staff); and

Governance.

Staff in areas other than where it is a compliance requirement are encouraged to undertake training in superannuation including the Association of Superannuation Funds of Australia’s Certificate of Superannuation known as RG 146 or at a minimum, Superannuation Essentials which covers the core elements of RG 146.

RBF supports its staff in the attainment of the Diploma of Financial Services (Superannuation), the Diploma of Financial Services (Financial Planning) and the Advanced Diploma of Financial Services (Financial Planning), which are coordinated through accredited providers. Also, RBF actively encourages and supports its staff in a range of additional learning and development activities such as short courses, workshops, professional development seminars etc. relevant to their work or expertise. Experienced employees within RBF also conduct in-house training on systems, business development, products and services.

Outsourcing Project As detailed on page 11, an Outsourcing Project Team was established following the Board’s decision in April 2010 to outsource RBF member administration and some external communication activities and its confirmation of Mercer (Australia) Pty Ltd as the successful partner.

The objective of the Outsourcing Project was to transition RBF member administration to Mercer (Australia) Pty Ltd before 30 June 2011.

A Project Team was established in both RBF and Mercer, each headed by a Program Manager who reported to a Joint Steering Committee. The Joint Steering Committee had representation from both RBF and Mercer and external representatives and was chaired by the RBF Chief Executive Officer. Mr Tim Baker was appointed RBF Program Manager and Mr Sean Churchward was appointed Mercer Program Manager.

The Project based its approach on the Tasmanian Government Project Management Guidelines Version 6.0 (March 2005). However, due to the complexity of the project, it was necessary to modify and enhance the approach in order to achieve the Project objective within the target date for completion. It was evident from the outset that to meet the Project timeframe, it was essential to maintain a strong Project Management focus together with a rigorous governance discipline in all aspects of its activities. The Joint Steering Committee developed and monitored the governance framework for the Project.

Project implementation was undertaken through workstreams, each headed by a Workstream Leader, with 11 workstreams in RBF and seven workstreams in Mercer. The RBF workstreams covered project management, coordination, data cleansing and extraction, contract management, information technology and facilities, communication, integration of employer agencies, business integration, finance and treasury, and a workstream to merge the RBF-TAS SG and Investment Accounts. The RBF Workstreams Leaders were supported by both

Continued overleaf

James (Patient Transport Officer), RBF member


staff and contract resources and a considerable contribution was made to the RBF workstreams by staff from other Divisions.

Responsibility for the RBF website was transferred to Mercer in September 2010. RBF ceased provision of member administration services on Friday 29 April 2011 and Mercer became responsible for all agreed functions and services from the start of business on Monday 2 May 2011. Phase 2 – Operational Implementation – Stage 2 was achieved on time, within the approved project budget, within RBF’s risk tolerance and to the required quality standard.

After a limited service period while data was transferred from RBF to Mercer and tested, all Mercer systems supporting administration of RBF member services went on line by 30 June 2011, the completion of Stage 3 – Transition.

A ‘post implementation’ evaluation will be undertaken in June 2012, bringing the project to a formal closure.

RSE Licensing ProjectIn October 2008, the Premier announced that he had asked the Treasurer to undertake the necessary reform process for RBF to become a Registrable Superannuation Entity (RSE), regulated by the Australian Prudential Regulation Authority (APRA).

The project objective is for RBF to be issued with an APRA RSE Licence from 1st July 2012 with registration of RBF Funds and Schemes to be completed within 21 days of the licence being issued.

The transition to an APRA regulated entity requires changes spanning the whole organisation, as well as changes to legislation and, importantly, cultural change. Therefore, the RSE Licensing Project was established in July 2010 to ensure a coordinated and integrated approach to address the various components that must be satisfied for RBF to become a licensed RSE.

The governance structure of the Project includes a Steering Committee with a representative from the Department of Treasury and Finance and the RBF Chief Executive Officer as Project Sponsor and Steering Committee Chair.

Cultural change has supported the CEO and Division Managers to lead the RSE Licensing initiative and support RBF staff through the associated changes to the organisation.

Project Activity The RSE Licensing Project has 11 work streams and encompasses the business as usual functions of compliance, risk management and legal services. The Program Manager – RSE Licensing Project is accountable for the successful delivery of the Project.

Each work stream has a Work Stream Leader. Together they are carrying out the scope of the project which encompasses all work necessary to effect any change that is required in order for RBF to obtain an RSE Licence including (but not limited to) changes to:

Fund and Scheme rules;

legislation;

RBF Board composition;

financial structures for the purposes of satisfying the requirements of ‘Adequacy of Resources’;

governance frameworks and policies (including implementation);

development, implementation, monitoring and review of all risk management and compliance frameworks, policies and systems;

development and implementation of documented procedures for critical business activities;

cultural change management to a compliant and risk aware culture (at all levels, including Board level);

monitoring and reporting (to the Steering Committee) on risks associated with activities outside the RSE Licensing Project that may impact on RSE Licensing;

provision of advice (in relation to the likely impact of considered or proposed activities on RSE Licensing);

submission of the RSE Licence application and coordinating review enquiries and responses from and to APRA; and

registration of the Funds and Schemes.

Given the scope of the project and the integral part of Risk Management, Compliance and Legal Services, these three business functions are also encompassed in the RSE Licensing Project.

Risk Management The RBF Board views risk management as an essential element of good corporate governance.

RBF’s approach to risk management is in accordance with AS/NZS ISO 31000:2009 - Risk Management - Principles and Guidelines. The RBF Board-approved Risk Management Strategy adopts a structured approach, using consistent methods for the assessment and treatment of all types of risk, at all organisational levels and for all activities.

The Risk Management Plan which has been approved by the RBF Board has been developed for each of the six RBF Funds and Schemes.

Compliance The Compliance Policy establishes the compliance framework within which RBF will conduct its business. It demonstrates RBF’s commitment to compliance by documenting the mechanisms that it will adopt to manage its compliance program and therefore its compliance obligations. The Compliance Policy is based on the Australian Standard AS 3806-2006. Management of member complaints and internal reviews is also encompassed within the compliance function.

Legal Services RBF has an internal Legal Counsel responsible for:

directly providing, or alternatively arranging for the external provision of, all legal advice and services for RBF’s business;

ensuring that RBF’s contract management policy and procedures are appropriate for an RSE and are operating effectively; and

the management of relationships with external legal advisers as well as managing the costs associated with RBF obtaining that advice.


7

Investment performance

Investment markets improved significantly with the Australian and International share markets up more than 10% and 3% respectively in Australian Dollar terms over the 12 months to 30 June 2011.

RBF continues to perform well compared to other funds with our carefully planned Investment Strategy protecting members from as much of the market volatility as possible while maintaining a strong focus on long-term returns.

The investment returns for RBF’s default Member Investment Choice option, RBF Actively Managed, was 8.3% for 2010–11 for both the Investment Account and the RBF-TAS SG Account*. Investment returns reflect the return paid to members after investment management fees and taxes. This is on par with the median return of balanced funds of 8.4% for the year according to the SuperRatings Fund Crediting Rate Survey.

Tasmanian investmentsRBF’s internally managed Tasmanian investments in commercial mortgages and property continued to make a significant contribution to the performance of the Fund. RBF also owns 49.9% of Hobart International Airport.

Combined, these investments amount to $323.1 million and represent 8.4% of the Fund.

Investment philosophy and managementThe RBF Board’s investment philosophy is one of researched and disciplined decision making and asset diversification. The RBF Board has appointed a mix of external investment managers to manage the majority of the Fund’s assets. Tasmanian-based investments are mostly managed internally by RBF.

All investment managers are regularly reviewed and assessed against performance targets. RBF used the following consultants and service providers during 2010–11:

Investment Management and Asset Allocation JANA Investment Advisors Pty Ltd

Taxation Ernst & Young Australia Cath King & Associates

Actuarial Mercer (Australia) Pty Ltd

Custodial J P Morgan Worldwide Securities Services

Internal Audit KPMG

Auditor Tasmanian Auditor-General

Member Investment Choice (MIC)Members with an Investment Account, an RBF-TAS SG Account*, an Allocated Pension Account or a Term Allocated Pension Account have access to MIC. Through MIC, RBF members can access ten different investment options as at 30 June 2011.

Following an assessment of our MIC options, five were closed in November 2010.

These were:

State Street Balanced Index;

State Street Australian Shares Index;

Maple-Brown Abbott Balanced;

Maple-Brown Abbott Australian Shares; and

RBF Diversified Growth.

The asset allocation settings, performance objectives and the investment returns of the closed options and investment returns for the current options are shown on the following pages.

* RBF-TAS SG Accounts have been referred to, and consolidated with, RBF Investment Accounts since 29 April 2011.

Miranda (Administrative Assistant), RBF member


My RBF experience was positive right from the moment I walked in the door.Stephen (Principal), RBF member

Investment strategy – asset allocation at 30 June 2011The investment strategy used by the RBF Board to achieve the performance objective for individual MIC options is to invest in portfolios of assets exposed to the major asset classes that are appropriate for each MIC option, as shown below.

Changes were made during the year to the asset allocation for RBF Actively Managed.

Australian Shares

%

International Shares

%

Property %

Alternative Investments

%

Fixed Interest

%

Cash %

Diversified options:

RBF Actively Managed (default) benchmark1

33 24 12 15 12 4

Dynamic Asset Allocation range for Actively Managed

28-38 19-29 7-17 10-20 9-15 0-9

RBF Long Term Growth 45 30 12 8 5 –

RBF Moderate Growth 22 15 8 10 30 15

RBF Conservative Growth 15 10 3 2 45 25

RBF Socially Responsible Investments2 36 24 13 1 23 3

Asset class options:

RBF Australian Shares 100 – – – – –

RBF International Shares – 100 – – – –

RBF Property & Alternative Investments – – 63 37 – –

RBF Fixed Interest – – – – 100 –

RBF Cash – – – – – 100

1. The RBF Actively Managed option differs from all other options offered by RBF. After consideration of advice from specialist external consultants, RBF sets the Dynamic Asset Allocation (DAA) on an annual basis to reflect its view on investment markets and assets class valuations. The DAA is also reviewed during the year when the RBF Board may vary the asset allocation in line with the options’ objectives and targets. The DAA is based on a range for each asset class for RBF Actively Managed. The targeted DAA and ranges for RBF Actively Managed as at 30 June 2011 are shown above.

2. The RBF Socially Responsible Investments option is solely invested in the AMP Capital Responsible Investment Leaders Balanced Fund. The asset allocation for this option is subject to change without notice.


Performance objectivesThe performance objectives and target real rates of return, that are the returns above the inflation rate, for the 10 Member Investment Choice options are shown below:

Objective Target real rate of return net of investment management fees and taxes


RBF Actively Managed To provide a moderate to high level of capital growth over the medium to long term.

4.0% pa over rolling five-year periods

RBF Long Term Growth To provide a high level of capital growth over the long term.

5.0% pa over rolling seven-year periods

RBF Moderate Growth To provide a moderate level of capital growth over the medium term.

3.0% pa over rolling three-year periods

RBF Conservative Growth To provide some capital growth over the short to medium term while also maintaining a moderate to high level of capital stability and a low probability of a negative return in any one year.


RBF Socially Responsible Investments To provide a moderate level of capital growth over the long term, by investing in Australian and overseas companies that will form part of a socially and environmentally sustainable future and that meet ethical investment criteria.



RBF Australian Shares To provide a high level of capital growth over the long term by investing in Australian shares.


RBF International Shares To provide a high level of capital growth over the long term by investing in a portfolio of international shares.


RBF Property & Alternative Investments To provide a stable income stream and also offer the opportunity for capital growth over the longer term.


RBF Fixed Interest To provide a regular income stream and retain capital value over the medium term.


RBF Cash To provide a high level of capital security and maintain the purchasing power of the capital invested.

0.5% over a one-year period

Olwen (Project Officer), RBF member

Brett (Constable), RBF member

I trust RBF with my financial future, and that security is important to me and my family.Olwen (Project Officer), RBF member


Investment returnsThe following tables show the compound average investment returns to 30 June 2011 for the past 3, 5, 7 and 10 years where available, as well as since inception. Past performance is not a reliable predictor of future performance, but longer-term historical data should be a more useful guide to members in assessing the relevance of current year returns to their retirement savings goals.

RBF calculates the weekly investment returns as follows:

Step 1 – Gross investment return

Step 2 – Less investment management fees

Step 3 – Less income tax expense

Step 4 – Equals the investment return (after investment fees and tax).

Investment returns are calculated net of investment management fees and tax. Administration fees are deducted directly from members’ accounts after the returns have been applied.

These rates only apply to money invested in the relevant accounts and options for the whole period. The effective rate an individual member earned may be different depending upon when they joined the Fund and the timing of any contributions, withdrawals and investment switches.

Phil clarified several superannuation benefits available to me. I found his friendly, informative manner reassuring, and I have a clearer picture of my options.Kerry (Teacher), RBF member


Investment returns – Investment Account

06-07 %

07-08 %

08-09 %

09-10 %

10-11 %

3 years % pa

5 years % pa

7 years % pa

10 years % pa

Since Inception

Inception Date


RBF Actively Managed

15.08 -6.44 -10.41 9.94 8.31 2.18 2.81 5.64 5.45 5.96 2/10/1999

RBF Long Term Growth

18.36 -10.22 -13.87 11.70 8.83 1.54 2.15 5.90 5.09 6.07 2/10/1999

RBF Moderate Growth*

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 18/08/2010

RBF Conservative Growth

8.52 -0.36 -0.03 10.41 7.55 5.89 5.12 5.97 5.31 5.67 2/10/1999

RBF Socially Responsible Investments

12.50 -7.15 -11.10 11.26 6.67 1.80 1.96 4.88 N/A 4.74 20/10/2001


RBF Australian Shares

25.97 -15.25 -18.77 15.91 8.93 0.84 1.82 7.17 N/A 7.54 29/09/2001

RBF International Shares

11.06 -18.18 -16.05 12.24 8.87 0.85 -1.40 1.65 N/A 0.78 20/10/2001

RBF Property & Alternative Investments

12.54 10.17 -5.97 -0.72 7.06 -0.02 4.38 6.43 N/A 6.97 28/06/2003

RBF Fixed Interest

4.13 4.73 6.36 10.13 7.58 8.02 6.57 6.25 N/A 5.86 28/06/2003

RBF Cash 5.28 6.22 4.49 3.27 4.18 3.98 4.69 4.73 4.57 4.65 2/10/1999

* This option became available on 18 August 2010.

Investment Account investment returns – Discontinued Investments: Please note that the following table contains information for the MIC options that were closed as of 5 November 2010. The returns below are based on the last full month of returns, October 2010.

06-07 %

07-08 %

08-09 %

09-10 %

10-11 %

3 years % pa

5 years % pa

7 years % pa

10 years % pa

Since Inception

Inception Date

Options closed 5 November 2010

RBF Diversified Growth

14.54 -7.24 -8.57 12.63 7.29 -0.61 4.79 6.90 5.67 6.27 2/10/1999

State Street Balanced Index

13.07 -11.31 -10.83 13.83 6.94 -2.89 3.15 5.87 N/A 4.53 27/10/2001

State Street Australian Shares Index

26.97 -13.92 -19.06 16.16 5.81 -6.19 5.21 9.40 N/A 8.06 3/11/2001

Maple-Brown Abbott Balanced

14.74 -9.42 -6.06 11.63 3.78 -0.77 4.06 6.30 N/A 6.85 5/07/2003

Maple-Brown Abbott Australian Shares

26.71 -13.73 -13.32 17.32 2.62 -2.92 6.07 9.23 N/A 10.36 28/06/2003


Investment returns – RBF-TAS SG Account

RBF-TAS SG Account investment returns – Please note that the RBF-TAS SG Account was merged with the Investment Account on 29 April 2011. The returns below are based on the last full month of returns before the merge, March 2011.

06-07 %

07-08 %

08-09 %

09-10 %

10-11 %

3 years % pa

5 years % pa

7 years % pa

10 years % pa

Since Inception

Inception Date



15.08 -6.44 -10.41 9.94 4.82 1.58 2.93 6.30 5.68 6.05 25/04/2000


18.36 -10.22 -13.87 11.70 3.78 0.80 2.31 6.82 5.82 6.10 25/04/2000




8.52 -0.36 -0.03 10.41 6.30 5.50 5.00 6.16 5.41 5.67 25/04/2000


12.50 -7.15 -11.10 11.26 3.12 2.23 2.12 5.58 N/A 5.04 20/10/2001



25.97 -15.25 -18.77 15.91 1.49 0.41 2.40 8.52 N/A 8.24 29/09/2001


11.06 -18.18 -16.05 12.24 3.53 -1.01 -2.04 2.59 N/A 0.96 20/10/2001


12.54 10.17 -5.97 -0.72 7.47 0.14 4.86 6.67 N/A 7.05 28/06/2003

RBF Fixed Interest

4.13 4.73 6.36 10.13 8.19 7.58 6.23 6.08 N/A 5.79 28/06/2003

RBF Cash 5.28 6.22 4.49 3.27 4.10 4.21 4.72 4.75 4.57 4.69 25/04/2000


RBF-TAS SG Account investment returns – Discontinued Investments: Please note that the following table contains information for the MIC Options that were closed as of 5 November 2010. The returns below are based on the last full month of returns, October 2010.

06-07 %

07-08 %

08-09 %

09-10 %

10-11 %

3 years % pa

5 years % pa

7 years % pa

10 years % pa

Since Inception

Inception Date



14.54 -7.24 -8.57 12.63 7.29 -0.61 4.79 6.90 5.69 6.00 25/04/2000


13.07 -11.31 -10.83 13.83 6.94 -2.89 3.15 5.87 N/A 4.47 27/10/2001


26.97 -13.92 -19.06 16.16 5.81 -6.19 5.21 9.40 N/A 8.05 3/11/2001


14.74 -9.42 -6.06 11.63 3.78 -0.77 4.06 6.30 N/A 6.85 5/07/2003


26.71 -13.73 -13.32 17.32 2.62 -2.92 6.07 9.23 N/A 10.37 28/06/2003


Investment returns – Allocated Pension Account

06-07 %

07-08 %

08-09 %

09-10 %

10-11 %

3 years % pa

5 years % pa

7 years % pa

10 years % pa

Since Inception

Inception Date



16.20 -6.68 -10.59 10.51 9.21 2.57 3.19 6.32 5.92 6.60 15/01/2000


19.50 -10.76 -14.00 12.85 9.80 2.14 2.58 6.53 5.59 6.39 15/01/2000




9.62 -0.41 -0.38 11.09 8.67 6.35 5.60 6.67 6.01 6.46 15/01/2000


13.57 -7.74 -12.04 11.11 7.61 1.69 1.96 5.19 N/A 5.18 20/10/2001



27.17 -15.73 -17.81 17.86 10.09 2.16 2.70 8.15 N/A 8.58 29/09/2001


12.31 -20.06 -18.74 11.49 9.82 -0.17 -2.24 1.31 N/A 0.66 20/10/2001


13.62 11.03 -6.27 -0.47 7.71 0.16 4.86 7.01 N/A 7.55 28/06/2003

RBF Fixed Interest

4.78 5.59 7.51 12.01 8.97 9.49 7.74 7.34 N/A 6.89 28/06/2003

RBF Cash 6.25 7.35 5.30 3.86 4.94 4.70 5.53 5.58 5.40 5.52 15/01/2000


Allocated Pension Account investment returns – Discontinued Investments: Please note that the following table contains information for the MIC options that were closed as of 5 November 2010. The returns below are based on the last full month of returns, October 2010.

06-07 %

07-08 %

08-09 %

09-10 %

10-11 %

3 years % pa

5 years % pa

7 years % pa

10 years % pa

Since Inception

Inception Date



15.89 -7.88 -9.22 13.13 8.82 -0.81 5.14 7.55 6.25 6.71 15/01/2000


14.35 -12.33 -10.71 13.73 8.35 -3.05 3.53 6.56 N/A 5.06 27/10/2001


28.54 -14.68 -19.67 16.70 9.06 -6.02 5.80 10.14 N/A 8.79 3/11/2001


16.20 -10.29 -6.90 11.39 5.44 -1.09 4.30 6.85 N/A 7.48 5/07/2003


28.28 -14.48 -13.55 17.97 4.97 -2.74 6.61 9.89 N/A 11.08 28/06/2003


Investment returns – Term Allocated Pension Account

06-07 %

07-08 %

08-09 %

09-10 %

10-11 %

3 years % pa

5 years % pa

7 years % pa

10 years % pa

Since Inception

Inception Date



16.20 -6.68 -10.59 10.51 9.21 2.57 3.19 N/A N/A 5.08 1/07/2005


19.50 -10.76 -14.00 12.85 9.80 2.14 2.58 N/A N/A 4.99 1/07/2005




9.62 -0.41 -0.38 11.09 8.67 6.35 5.60 N/A N/A 6.14 1/07/2005


13.57 -7.74 -12.04 11.11 7.61 1.69 1.96 N/A N/A 4.10 1/07/2005



27.17 -15.73 -17.81 17.86 10.09 2.16 2.70 N/A N/A 5.44 1/07/2005


12.31 -20.06 -18.74 11.49 9.82 -0.17 -2.24 N/A N/A 1.09 1/07/2005


13.62 11.03 -6.27 -0.47 7.71 0.16 4.86 N/A N/A 6.09 1/07/2005

RBF Fixed Interest

4.78 5.59 7.51 12.01 8.97 9.49 7.74 N/A N/A 7.13 1/07/2005

RBF Cash 6.25 7.35 5.30 3.86 4.94 4.70 5.53 N/A N/A 5.57 1/07/2005


Term Allocated Pension Account investment returns – Discontinued Investments: Please note that the following table contains information for the MIC options that were closed as of 5 November 2010. The returns below are based on the last full month of returns, October 2010.

06-07 %

07-08 %

08-09 %

09-10 %

10-11 %

3 years % pa

5 years % pa

7 years % pa

10 years %

pa

Since Inception

Inception Date



15.89 -7.88 -9.22 13.13 8.82 -0.81 5.14 N/A N/A 5.68 1/07/2005


14.35 -12.33 -10.71 13.73 8.35 -3.05 3.53 N/A N/A 4.23 1/07/2005


28.54 -14.68 -19.67 16.70 9.06 -6.02 5.80 N/A N/A 6.65 1/07/2005


16.20 -10.29 -6.90 11.39 5.44 -1.09 4.30 N/A N/A 4.77 1/07/2005


28.28 -14.48 -13.55 17.97 4.97 -2.74 6.61 N/A N/A 6.98 1/07/2005


Defined benefit schemes Contributory Scheme

State Fire Commission Superannuation Scheme (incorporated into RBF 1 May 2006)

Tasmanian Ambulance Service Superannuation Scheme (incorporated into RBF 30 June 2006)

Parliamentary Superannuation Fund (incorporated into RBF 1 January 2003)

Parliamentary Retiring Benefits Fund (incorporated into RBF 1 January 2003).

Performance objectiveThe performance objective for the defined benefit schemes for net investment returns (after investment management fees and tax) is:

to exceed the rate of inflation by 4.5% per annum over rolling five-year periods.

Generally, investment performance does not affect the level of benefits paid to members of RBF defined benefit funds and schemes.

Mary-Lee (Administrative Manager), RBF member


Investment strategy asset allocation at 30 June 2011The investment strategy used by the RBF Board to target the above performance objective is to invest in a balanced portfolio exposed to all major asset classes as shown below. The asset allocation of these defined benefit funds and schemes may vary from time to time to reflect the RBF Board’s view of different investment markets, within the predetermined ranges shown below.

Asset allocation – defined benefit schemes as at 30 June 2011

Australian Shares

%


%

Low Beta Strategies

%

Property %


%

Fixed Interest

%

Cash %

Contributory Scheme

Strategic Asset Allocation

25 17 4 16 20 12 6

Range within which allocations can vary

15-35 7-27 0-8 6-26 10-30 2-22 0-14

Parliamentary Superannuation Fund, Parliamentary Retiring Benefits Fund, State Fire Commission Superannuation Scheme and Tasmanian Ambulance Service Superannuation Scheme

Strategic Asset Allocation

25 17 4 16 20 12 6

Historical investment returns

Net return (after investment fees and tax) 06-07 % 07-08 % 08-09 % 09-10 %

Contributory Scheme 15.20 -3.70 -9.50 5.20

Parliamentary Superannuation Fund 14.60 -5.20 -9.80 7.50

Parliamentary Retiring Benefits Fund 14.60 -5.20 -9.80 7.50

State Fire Commission Superannuation Scheme 14.70 -5.20 -9.70 7.50

Tasmanian Ambulance Service Superannuation Scheme 14.70 -5.20 -9.70 7.50

Investment returns compared to investment objectives

Net return (after investment fees and tax) 1 year

%

3 years

% pa

5 years

% pa

7 years

% pa

10 years

% pa

Contributory Scheme 8.50 1.10 2.80 5.60 5.60

Parliamentary Superannuation Fund 8.50 1.70 2.70 5.60 N/A

Parliamentary Retiring Benefits Fund 8.50 1.70 2.70 5.60 N/A

State Fire Commission Superannuation Scheme 8.60 1.80 N/A N/A N/A

Tasmanian Ambulance Service Superannuation Scheme 8.60 1.80 N/A N/A N/A

Objectives: CPI + 4.5% pa over rolling five-year periods N/A 7.20 7.10 7.50 7.10


Investment management feesDuring 2010–11, RBF applied the following level of investment management fees to MIC options.

From 1 July 2010

Member Investment Choice option

Base investment fee % pa

Performance-related investment

fee % pa

Total investment fees % pa


RBF Actively Managed 0.65 0.03 0.68


0.66 0.04 0.70

RBF Moderate Growth 0.52 0.02 0.54


0.41 0.01 0.42


0.83 0.00 0.83


RBF Australian Shares 0.56 0.08 0.64


0.84 0.00 0.84


0.80 0.00 0.80

RBF Fixed Interest 0.38 N/A 0.38

RBF Cash 0.04 N/A 0.04

These fees are based on the costs incurred over the calendar year before and include fees paid to RBF’s investment managers, asset consultants and custodian. The investment fee may vary depending upon factors such as the mix of investment managers used and their performance against benchmarks.

Performance fees are paid to some investment managers when their performance exceeds a predetermined objective. Performance fees earned over the preceding calendar year are shown separately in the table above and are included in the total investment fees column.

Defined benefit scheme Total investment fees % pa

From 1 July 2010

Contributory Scheme 0.63

Parliamentary Superannuation Fund 0.76

Parliamentary Retiring Benefits Fund 0.74

State Fire Commission Superannuation Scheme 0.65

Tasmanian Ambulance Service Superannuation Scheme 0.65

RBF has prepared information in accordance with ASIC guidelines for presentation of a superannuation fund’s fees and charges. To view this information visit www.rbf.com.au

Changes to investmentsDuring 2010–11, several changes were made to the investment managers used by the RBF Board as a result of the ongoing review by the RBF Board of manager performance and the structure of the Fund’s portfolio. New investments were made within the Australian Shares asset class with Schroder Investment Management Australia Ltd. Within the International Shares asset class, new investments were made with Harding Loevner LP. Within the Alternatives asset class, new investments were made with Babson Capital Management LLC. Investments were terminated with Australian Shares manager 452 Capital Pty Ltd and International Shares manager Alliance Bernstein Australia Ltd.

Derivatives

What are derivatives?Derivatives are financial contracts, the value of which depends upon the value of an underlying instrument or asset (typically a commodity, bond, equity or currency, or a combination of these). Derivatives can be used to reduce the risk of (or ‘hedge’) an investment in the underlying instrument.

RBF’s use of derivativesInvestment managers may use derivatives if the RBF Board deems this appropriate and it is documented in contracts with the individual managers. The investment managers provide the RBF Board with detailed risk management statements which outline their approach to derivatives and confirm that their approach is applicable to the investments they manage.

The RBF Board, through the Investment Committee, monitors investment managers to confirm that the use of derivatives accords with the overall investment strategy of the Fund and is consistent with the performance objectives of each portfolio and sub-fund.

The RBF Board uses its currency manager, Mesirow, to enter into forward exchange contracts to manage foreign currency exposures within the Fund, in accordance with the RBF Board’s Investment Strategy.


8

Funds Under Management (FUM)

Funds Under Management as at 30 June 2011

2010 $ million

2011 $ million

2011 % of FUM

Australian Shares

452 Capital 174.7 0.0 0.00

Invesco 44.9 56.9 1.47

Maple Brown Abbott Ltd

Discretely Managed 249.4 268.2 6.94

Australian Equity Trust (previous MIC option) 16.0 0.0 0.00

Paradice 182.7 221.7 5.74

Schroders 0.0 201.6 5.22

Solaris 186.8 209.0 5.41

State Street Global Advisors Australian Equities Index Trust (previous MIC option)

13.0

0.0

0.00

Tribeca 78.6 88.1 2.28


Alliance Bernstein 136.1 0.0 0.00

Apostle Global S/M 33.8 36.0 0.93

Baillie Gifford 65.5 83.6 2.16

Capital International 212.5 222.4 5.76

Fauchier Partners 62.4 66.4 1.72

Harding Loevner 0.0 156.5 4.05

Independent Franchise Partners 98.1 108.0 2.80

Mesirow Currency Hedge (17% of all International equities) 0.5 1.5 0.04

Pzena Investment Management 89.2 91.6 2.37

Diversified Fixed Interest

Brandywine Global Fixed Interest 142.3 158.7 4.11

Mortgages (Non.C) 167.6 161.3 4.18

PIMCO Australian & Global Bonds (Cus.) 104.5 186.9 4.84

The Super Loan Trust (Cus.) 6.9 7.3 0.19

Property

AMP - CORE Property 105.2 115.2 2.98

AMP Capital - Select Property 3 30.4 47.1 1.22

Goodman Aust Industrial Fund 24.7 26.3 0.68

Gresham Mezzanine Prop Fund 2 2.0 0.9 0.02

Lend Lease APPF 176.0 190.5 4.93

Lend lease Communities Fund 1 12.9 10.6 0.27

Lend Lease Real Estate Partners No 2 Fund 8.7 0.2 0.01

Macquarie RVG 53.7 52.0 1.35

RBF Board (Direct Property) 41.2 48.0 1.24


I’m contributing extra money to my superannuation now so I can enjoy a comfortable retirement.Heather (Senior Communications Consultant), RBF member

Funds Under Management as at 30 June 2011 (continued)


AMP Infrastructure Equity Fund 40.90 43.0 1.11

AMP Responsible Investment Leaders - Balanced Fund 9.90 12.5 0.32

AMP Strategic Infrastructure Trust of Europe 21.00 21.0 0.54

Babson 0.0 50.7 1.31

GMO Multi-Strategy Trust (Absolute Return) 57.90 60.6 1.57

Hastings Utilities Trust of Australia (Infrastructure) 153.90 170.5 4.41

Hastings Yield Fund (Infrastructure Debt) 46.30 55.8 1.44

IFM International Private Equity Fund No. 1 5.30 4.4 0.11

Maple Brown Abbott Diversified Investment Trust (previous MIC Option)

4.90

0.0

0.00

State Street Global Advisors Passive Balanced Trust (previous MIC Option)

2.40

0.0

0.00

Tasmanian Gateway Consortium Holdings (Infrastructure) 98.50 113.8 2.95

Triplepoint (Absolute Return) 50.60 54.3 1.41

Cash

Commonwealth Bank of Australia 7.9 0.0

Perennial 120.7 102.8 2.66

Tascorp (Non.C) 296.3 254.2 6.58

Westpac Banking Corporation 31.9 103.0 2.67

Total RBF Portfolio 3,467.7 3,863.1 100.00


During 2010–11, a number of amendments to RBF governing legislation contained in the Public Sector Superannuation (Miscellaneous Amendments) Act 2009 took effect. The amendments primarily related to the transfer of the Investment Account from the Contributory Scheme to the Tasmanian Accumulation Scheme. Corresponding amendments were also made to the Tasmanian Accumulation Scheme Trust Deed.

Amendments to the governing legislation were also made by the Retirement Benefits Amendment Regulations 2011. These amendments provided the RBF Board with greater discretion with regard to the payment of interest on late benefit payments as well as clarifying that such interest payments are not capable of being converted to a pension.

RBF Board policiesTo assist the RBF Board as Trustee and ensure the exercise of its duties and obligations are undertaken in the best interests of all stakeholders, the RBF Board has in place the following policies:

Privacy Policy

Investment Policy Statement

Sponsorship Evaluation Criteria

Conflicts of Interest Policy

Direct Contact by Service Providers with Board Members

Board Members Obtaining Independent Advice

Public Interest Disclosures Act 2002 – RBF Procedures.

These policies can be found on RBF’s website www.rbf.com.au

Public Interest Disclosures Act 2002The objective of the Public Interest Disclosures Act 2002 (the Act) is to encourage and facilitate the making of disclosures about improper conduct by public officers and public bodies (a public interest disclosure). The Act provides protection for persons making a disclosure and establishes a system for the matters disclosed to be investigated and rectifying action to be taken.

During 2010–11 there were:

no disclosures made to the RBF Board

no public interest disclosure matters referred to the RBF Board by the Ombudsman

no public interest disclosure matters referred by the RBF Board to the Ombudsman to investigate

no public interest disclosure matters taken over by the Ombudsman from the RBF Board

no recommendations of the Ombudsman that relate to the RBF Board.

The RBF Board’s current Public Interest Disclosure Procedures are available on the website www.rbf.com.au

Alternatively, a copy of the procedures can be obtained by contacting the Protected Disclosure Officer by email at [email protected] or by telephone on (03) 6233 2749.

9

Legislation and policy

Adam (Constable), RBF member


RBF received 31 applications for review during the 2010–11 financial year, in addition to 19 carried forward from 2009–10 and previous years.

As at 30 June 2011, 19 of these matters were finalised and 31 were pending.

Of the 19 matters finalised, nine were resolved or withdrawn by the applicants, five involved a preliminary decision by the Chief Executive Officer under delegated authority from the RBF Board after considering further information and five involved a hearing before the RBF Board.

Of the applications for review received in the 2010–11 financial year, 62% related to applications relating to Ill Health.

Each matter under review was thoroughly investigated prior to consideration by the CEO or the RBF Board. Before any hearing before the RBF Board, every effort was made to resolve each issue through discussion, investigation and conciliation.

10

Member review statistics

Amanda (Administrative Assistant), RBF member


RBF charges no entry or exit fees. Members benefit from a wide range of flexible superannuation options. There are many opportunities for members to increase their super and secure their retirement lifestyle.

Members can refer to page 45 to find out about the many benefits their superannuation scheme has to offer.

Tasmanian Accumulation Scheme – for people employed in the Tasmanian public sector from 15 May 1999 and other employees who do not have alternative superannuation arrangements. All new employees engaged in the Tasmanian public sector are able to become members of RBF by joining the Tasmanian Accumulation Scheme.

Contributory Scheme – for permanent employees and certain temporary or contract employees who started employment in the Tasmanian public sector before 15 May 1999.

State Fire Commission Superannuation Scheme (SFCSS) – for full time permanent uniformed employees who started employment in the Tasmanian Fire Service before 1 July 2005. The SFCSS was incorporated into RBF as a sub-fund from 1 May 2006.

Tasmanian Ambulance Service Superannuation Scheme (TASSS) – for permanent employees who started employment with the Tasmanian Ambulance Service before 30 June 2006. The TASSS was incorporated into RBF as a sub-fund from 30 June 2006.

11

Schemes, accounts and products

Parliamentary Superannuation Fund (PSF) – for Members of Parliament first elected to Parliament before 15 November 1985. The PSF was incorporated into RBF as a sub-fund from 1 January 2003.

Parliamentary Retiring Benefits Fund (PRBF) – for Members of Parliament first elected to Parliament after 14 November 1985 and before 1 July 1999. The PRBF was incorporated into RBF as a sub-fund from 1 January 2003.

RBF-TAS SG Account – where Superannuation Guarantee contributions for Tasmanian Accumulation Scheme members are invested. RBF-TAS SG Accounts have been referred to, and consolidated with, Investment Accounts since 29 April 2011.

Investment Account – an account in which Superannuation Guarantee contributions for Tasmanian Accumulation Scheme members and all personal contributions, rollovers, additional employer contributions, salary sacrifice and super co-contributions are invested.

Allocated Pension Account – an account for superannuants who have elected to invest in an Allocated Pension.

Term Allocated Pension Account – an account for superannuants who have elected to invest in a Term Allocated Pension. New accounts ceased being created after 20 September 2007.

Compulsory Preservation Account – an account for notional preserved unfunded benefits.

RBF membership statistics

Schemes and accounts 30/06/2010 Entrants Exits 30/06/2011

Tasmanian Accumulation Scheme*

68,973 3,093 2,796 69,270

Contributory Scheme 9,653 0 75 9,578

State Fire Commission Superannuation Scheme

116 0 0 116

Tasmanian Ambulance Service Superannuation Scheme

161 0 0 161

Parliamentary Superannuation Fund

3 0 1 2

Parliamentary Retiring Benefits Fund

7 0 0 7

Compulsory Preservation Account

16,190 2 693 15,499

Life Pension 8,215 4 42 8177

Allocated Pension 1,165 294 114 1345

Term Allocated Pension 30 0 0 30

* RBF-TAS SG Accounts have been referred to, and consolidated with, Investment Accounts since 29 April 2011.


Summary of schemes managed by RBF

Features Contributory Scheme Tasmanian Accumulation Scheme

Brief description of benefit

An unfunded defined benefit scheme where, for the majority of benefits paid, the final benefit depends on:

the average salary over the last three years worked in the public sector

the number of years for which contributions have been made to the scheme

the contribution rate(s) as a percentage of total salary.

An accumulation scheme where the final benefit depends on:

the amount of employer Superannuation Guarantee contributions deposited in the RBF-TAS SG Account*

the amount of employee contributions deposited in the Investment Account

the amount of any additional employer contributions, salary sacrifice contributions, spouse contributions or splits and/or Commonwealth Super Co-contributions deposited in the Investment Account

investment returns, net of fees and taxes, credited to the account

deduction of any insurance premiums and/or other fees.

Membership as at 30 June 2011

9,578 members (decreased from 9,653 members as at 30 June 2010)

69,270 members

Membership eligibility A scheme for permanent employees and certain temporary or contract employees who commenced employment in the Tasmanian public sector before 15 May 1999, the date the scheme was closed to new and most existing public sector employees.

Although closed to new employees the following employees have retained the right to become Contributory Scheme members:

permanent part-time employees employed before 1 July 1994 who have been continuously employed and have not previously elected to contribute;

married female employees employed before 1 July 1982 who have been continuously employed; and

persons who were permanent employees immediately before 1 April 1987 who have been continuously employed and previously denied contributory status on medical grounds.

A scheme for Tasmanian public sector employees, superannuants, Members of Parliament, Statutory Officers and spouses of RBF members.

Benefit options Members who meet Commonwealth preservation requirements may take a lump sum benefit, a Life Pension, an Allocated Pension, or a combination of these.

Members who meet Commonwealth preservation requirements may take a lump sum benefit, an Allocated Pension, or a combination of these.

Members who joined before 15 May 1999 may also take a Life Pension.

Contribution options Members must contribute the equivalent of between 5% and 15% of their salary. Member Investment Choice does not apply to these contributions.

Contributions may be made either as personal contributions, or by salary sacrifice.

Members can make additional personal contributions and salary sacrifice contributions to the Investment Account, which has Member Investment Choice.

All contributions are to be included in the concessional and non-concessional contribution limits according to contribution type.

Members can make personal contributions and salary sacrifice contributions to the Investment Account.

Members have access to Member Investment Choice.


The spouse of an RBF member cannot direct their superannuation guarantee contributions to a Tasmanian Accumulation Scheme account.



Summary of schemes managed by RBF (continued)Features Contributory Scheme Tasmanian Accumulation Scheme

Death and Incapacity Cover

For interim invalidity, a pension of up to 75% of the salary received in the past year is available for up to two years.

For Total and Permanent Incapacity a lump sum benefit is payable up to $50,000, with an additional $30,000 if approved by the RBF Board. The balance is payable as a Life Pension.

On death, a lump sum benefit is paid which can be converted to a Life or Allocated Pension by the surviving spouse.

Terminally ill members who are likely to die within 12 months can elect to receive a lump sum.

The insurance premium is 0.35% of a member’s salary. This amount is deducted each fortnight from the member’s account.

Members have limited Ill Health and Death Benefits until the member passes a Board approved medical examination or has contributed to the scheme for ten years at which time full benefits status is achieved.

For Temporary Incapacity, a pension of up to 75% of the salary received in the past year is available for up to two years.

For Permanent Incapacity, the benefit can be taken as a lump sum, an Allocated Pension or a combination.

Members who joined before 15 May 1999 can also take the benefit as a Life Pension.

On death, a lump sum benefit is paid.

Variable Death and Incapacity Cover is available from 0% to 300%. Members may elect to have no cover.

The insurance premium for standard 100% cover is 0.55% of a member’s salary. This amount is deducted each fortnight from the member’s RBF-TAS SG Account*.

Investment returns The investment return is the average of the previous three years’ market value return after provision is made for investment, administration and taxation costs in the last financial year.

Investment returns (net of charges) for the 2010–11 financial year were:

1/07/2010 – 30/09/2010 – -0.54%

1/10/2010 – 30/06/2011 – -3.45%

Generally, investment returns do not affect the level of benefits for Contributory Scheme members as benefits are based on a formula linked to salary, service and contribution rate(s).

Investment returns are set weekly and are based on the most recent net investment returns. Member account balances are adjusted in line with these returns each week.

The different investment returns for each Member Investment Choice option are available on the RBF website www.rbf.com.au and on flyers available from RBF.

Fees No fees are payable by the member. The scheme funds all fees.

Generally, the fees funded by the scheme do not affect the benefits paid to members.

For the year in review administration fees were 1.03% whilst investment management fees were 0.61% from 1 July 2010.

An administration fee and an investment management fee are charged. Each Member Investment Choice option has a different investment management fee.

The administration fees for different accounts are provided on page 44. The different investment management fees are provided on page 33.

Information about fees is published on the RBF website www.rbf.com.au and on RBF investment performance flyers.



Summary of schemes managed by RBF (continued)

Features State Fire Commission Superannuation Scheme (SFCSS)

Tasmanian Ambulance Service Superannuation Scheme (TASSS)

Brief description of benefit

A defined benefit scheme where, generally, the final benefit depends on:

salary (not including overtime and allowances for rent)

the number of years for which contributions have been made to the scheme.

A defined benefit scheme where, generally, the final benefit depends on:

average salary over the last year of membership worked

the contribution rate(s) used to deduct contributions from salary

the number of years for which contributions have been made to the scheme.

Membership as at 30 June 2011

116 members (same as at 30 June 2010)

161 members (same as at 30 June 2010)

Membership eligibility Membership is generally limited to full time permanent uniformed employees who elected to join and who started employment with the Tasmanian Fire Service prior to 1 July 2005.

The SFCSS was closed to new members from 1 July 2005.

Membership is generally limited to permanent employees who elected to join and who started employment with the Tasmanian Ambulance Service prior to 30 June 2006.

The TASSS was closed to new members from 30 June 2006

Benefit options Members who meet Commonwealth preservation requirements may take a lump sum benefit.

Members who roll over their scheme benefits into the Investment Account may take a lump sum, an Allocated Pension, or a combination of these.

Members who meet Commonwealth preservation requirements may take a lump sum benefit.

Members who roll over their scheme benefits into the Investment Account may take a lump sum, an Allocated Pension, or a combination of these.

Contribution options Members contribute 5% of their salary. Member Investment Choice does not apply to these contributions.

Contributions may be made either as personal contributions or by salary sacrifice.

Additional personal contributions and salary sacrifice contributions may be made to the Investment Account, which has Member Investment Choice.


Members must contribute between 5% and 11% of their salary. Member Investment Choice does not apply to these contributions.

Contributions may be made either as personal contributions or by salary sacrifice.

Additional personal contributions and salary sacrifice contributions may be made to the Investment Account, which has Member Investment Choice.


Death and Incapacity Cover

For Temporary Incapacity, a pension of up to 75% of salary (as defined by the underwriter) is available for up to two years.

For Total and Permanent Incapacity, the benefit can be taken as a lump sum, an Allocated Pension or a combination of these.


The insurance premium for Death and Incapacity Cover is met by the scheme. No deductions are made for premiums from member accounts.

For Temporary Incapacity, a pension of up to 75% of salary (as defined by the underwriter) is available for up to two years.

For Total and Permanent Incapacity, the benefit can be taken as a lump sum, an Allocated Pension or a combination of these.


The insurance premium for Death and Incapacity Cover is met by the scheme. No deductions are made for premiums from member accounts.


Summary of schemes managed by RBF (continued)

Features State Fire Commission Superannuation Scheme (SFCSS)


Investment returns The investment return is the average of the previous three years’ market value return after provision is made for investment, administration and taxation costs in the last financial year.

The net earning rate for the year ending 30 June 2011 was 8.63%.

The investment return is the average of the previous three years’ market value return after provision is made for investment, administration and taxation costs in the last financial year.

Generally, the investment return does not affect the level of benefits for TASSS members as benefits are based on a formula which is linked to salary, service and contribution rate.

The net earning rate declared for the year ending 30 June 2011 was 8.63%.

Fees No fees are payable by the member. The scheme funds all fees.


Administration fees are based on the actual costs of administering the scheme.

Investment management fees were 0.62% from 1 July 2010.

No fees are payable by the member. The scheme funds all fees.


Administration fees are based on the actual costs of administering the scheme.

Investment management fees were 0.63% from 1 July 2010.

My school’s relationship with Phil Claxton, RBF’s Business Relationship Officer, allows my staff to play an active role in managing their financial future.Andrew (Principal), RBF member


Parliamentary schemesBoth the Parliamentary Superannuation Fund and the Parliamentary Retiring Benefits Fund are defined benefit schemes. In both schemes, the benefits are determined by a formula based on salary and years of service. The Parliamentary Superannuation Fund provides members with a benefit paid as a lump sum.

The Parliamentary Superannuation Committee determines if a member of either Parliamentary Scheme is entitled to an invalidity benefit on the basis of ill health or physical or mental incapacity. The Committee consists of the President of the Legislative Council, the Speaker of the House of Assembly and the Secretary of the responsible Department or his or her nominee.

Compulsory Preservation AccountThe Compulsory Preservation Account is where notional preserved, unfunded benefits are recorded. Members may have a Compulsory Preservation Account if they left:

the Contributory Scheme; or

the Non-contributory Scheme before reaching preservation age.

The legislation does not allow for this account to be funded or transferred to another scheme until the member reaches preservation age.

The balance of the Compulsory Preservation Account is indexed to whichever is the greater of inflation or movements in average wages. In 2010–11, indexation rates for the Compulsory Preservation Account were:

1 July 2010 to 31 December 2010 6.702% pa (6.495% fortnightly compound rate) for the six month period

1 January 2011 to 30 June 2011 2.708% pa (2.674% fortnightly compound rate) for the six month period.

The rate is currently set at 5.230% pa (5.103% fortnightly compound rate) until 31 December 2011, at which time it will be reviewed.

15,499 members held Compulsory Preservation Accounts as at 30 June 2011.

No fees or charges are applied to the Compulsory Preservation Account. RBF’s investment performance will not affect the balance of the account.

When the member reaches preservation age, the member’s previous employer will fund the Compulsory Preservation Account and RBF will transfer the money into the Investment Account. The member will then be able to select an investment option using Member Investment Choice (MIC).

Once in the Investment Account, the benefit will accrue at the investment return for the MIC options selected. This will continue until retirement or commencement of a Transition to Retirement income, when RBF will pay the benefit. Members with a Compulsory Preservation Account are entitled to receive a Life Pension at retirement.

Investment AccountThe Investment Account is an accumulation-style account into which employer Superannuation Guarantee contributions are paid. In addition members can make additional contributions to their super into the Investment Account.

At 30 June 2011, there were 69,720 Investment Accounts open with more than $2.09 billion of members’ retirement savings.

Personal contributions can be made as automated payroll deductions, BPAY® from a bank account, or lump sum deposits.

While the account holder remains a Tasmanian public sector employee, they can also make salary sacrifice (concessional) contributions through an agreement with their employer.

Personal contributions will be subject to the non-concessional contributions limit. Salary sacrifice contributions will be included in the annual concessional contributions limit.

Member Investment Choice (MIC)The Investment Account gives members control over how their money is invested. Members can choose from a range of investment options to suit their personal needs. More information on each of the options is available on the RBF website www.rbf.com.au or by contacting RBF directly on 1800 622 631.

Rollover superTo consolidate super accounts, members can rollover savings from other superannuation funds into the Investment Account. Rollovers from other funds are not included in contribution limits.

As with all superannuation accounts, all contributions and investment returns received after 1 July 1999 are preserved until the member reaches preservation age, retires from the workforce or satisfies another condition of release.

Investment Account for the spouse of an RBF memberThe spouse of an RBF member may be able to open a Spouse Investment Account. Spouses of RBF members can rollover their other super and continue to save for retirement with RBF. Spouses can also make personal contributions through regular bank deductions or lump sum deposits.

Spouse contributionsIf either a member or their spouse earns less than $13,800 per annum and satisfies other criteria, the spouse earning the higher salary may be eligible to claim a tax offset for contributions to the low income earner’s super account.


Administration fees and costsRBF’s administration fees remained static during the year and continue unchanged into the 2011–12 financial year.

Under this fee structure, the lower of the two fees is payable only on that part of the account balance that is in excess of $150,000. This means that the lower fee does not apply to the entire account balance.

The administration fees and thresholds are shown in the table below:

Account Scale of fees for 2011–12

Part of account balance less than $150,000 (% pa)

Part of account balance more than $150,000 (% pa)

RBF-TAS SG Account* 0.45 0.20

Investment Account 0.45 0.20

Allocated Pension 0.45 0.20

Term Allocated Pension 0.45 0.20


Administration costs for the defined benefit schemes are deducted directly from the Funds Under Management (FUM) in each scheme and are not paid from member accounts. The costs are represented as a percentage of FUM in each scheme.

The table below shows the administration costs based on budget forecasts for the 2011–12 financial year:

Defined benefit scheme Administration costs 2010–11 (% pa)

Predicted administration costs 2011–12 (% pa)

Contributory Scheme 1.03 1.22

Parliamentary Superannuation Fund 0.89 0.65

Parliamentary Retiring Benefits Fund 0.89 0.77

State Fire Commission Superannuation Scheme 2.15 1.12


0.60

0.73

Ken (Radio Room Operator), RBF member


At RBF, members benefit through:

personal face to face service

workplace visits

lower fees with no entry or exit fees

all profits paid to members

consistent long-term investment performance.

RBF makes it easy for members to:

meet with an RBF representative

obtain financial advice relevant to your specific needs

make personal contributions or salary sacrifice to super through payroll deductions

personalise investment options online and view account details

open an Investment Account for your spouse.

RBF also provides Death and Incapacity Cover.

12

RBF Membership benefits

Secure the future with RBFNo matter which RBF scheme members belong to, they can secure their future with RBF super.

RBF encourages members to:

1. Know their super scheme: by learning how their benefit is calculated, they will know how to improve their super.

2. Plan: the old saying is true, if you plan nothing, nothing happens. Members are encouraged to plan to save and to maximise the benefits available through their superannuation. RBF can show members how.

3. Stay in touch: by reading Member Benefit Statements and newsletters and visiting the RBF website www.rbf.com.au

4. Ask more questions

Selecting a contribution methodThere are two different methods of contributing to RBF super schemes. Members can make payments from after-tax salary (personal contributions) or have their employer make payments on their behalf (salary sacrifice).

Every member’s financial circumstances are different, so what is right for someone may not be right for another member. Every member should consider their own situation when choosing their contribution method. Members can contact RBF to discuss their options, or use the calculators on the RBF website to help make decisions.

For many members, converting personal contributions into salary sacrifice creates a tax saving that can be used to increase their contribution rate.

Salary sacrifice is widely recognised as an effective way to make contributions to super, and members should carefully consider its benefits. By using the calculator on the RBF website, members can see how much extra they can be contributing by using salary sacrifice.

Contribution limitsContribution limits are now in place for all types of contributions to super, specifying the maximum amount members can contribute to super in any year, even if they contribute to more than one account.

Employer (concessional) contributions

There is a limit on how much an employer can contribute to a member’s super fund each year. If the employer contributions limit is exceeded, the member will have to pay tax on the excess contributions at the top marginal income tax rate plus Medicare levy.

This limit covers all concessional contributions which include contributions from employers, including Superannuation Guarantee payments, as well as salary sacrifice and any contributions for which the member intends to claim a tax deduction. The concessional contributions to defined benefit schemes are calculated using a formula and are also included in the limit.

Ann (Ministerial Officer), RBF member


Employer (concessional) contributions limit

Age under 50 $25,000 per year

Age 50 to 75 Up to $50,000 per year (transitional arrangement from 1 July 2007 to 30 June 2012)

Member (non-concessional) contributions

There is a limit on how much a member can contribute in non-concessional contributions to their super each year. The personal non-concessional contribution limit is $150,000 each year or $450,000 over three years for members under the age of 65. These limits apply to the total amount of non-concessional contributions made by one person, even if they contribute to more than one account or super fund.

Contributions that exceed the three-year non-concessional contribution limit cannot be accepted and will be returned to the member.

Contributions covered by the limit include personal contributions made from after-tax salary, lump sum deposits, spouse contributions and any excess concessional contributions. Rollovers and the Government component of Super co-contributions do not count towards the limit.

Personal (non-concessional) contributions limit

Age under 65 $150,000 per year per person or $450,000 over three years

Age 65 and over

$150,000 per year per person after passing a work test

I feel secure that my financial future is taken care of by RBF. Their regular communications keep me informed.Hannah (Administration Officer), RBF member

Members can choose how their money is invested.

Members with the following accounts have access to Member Investment Choice (MIC):

Investment Account

RBF-TAS SG Account*

Allocated Pension Account

Term Allocated Pension Account.

With MIC, members can choose an investment strategy to suit their individual needs. MIC offers a broad range of investment options with different levels of projected risk and return.

Members can choose to invest in one investment option, or in a number of options, and can switch between options. Where an entire account balance is rolled over or transferred, investment returns are not applied during the processing period. In peak processing times, this may be between six to thirteen days. Members who do not choose an investment option will have their investments allocated to the RBF Actively Managed option. This is RBF’s default option.


Death and Incapacity CoverGenerally, members are automatically entitled to Death and Incapacity Cover if they are:

a Tasmanian public sector employee; and

under age 60 (under age 65 for Tasmanian Ambulance Service Superannuation Scheme members); and

have a Tasmanian Accumulation Scheme account or are a member of the following schemes:

Contributory Scheme

State Fire Commission Superannuation Scheme (SFCSS)



Parliamentary Retiring Benefits Fund.


Members who have a Tasmanian Accumulation Scheme account can adjust the level of cover to suit their individual circumstances.

Members of the Contributory Scheme are entitled to limited cover until they successfully pass a medical examination or make contributions to the scheme for 10 years. There are certain circumstances where contributory service and the payment of contributions would not count toward the 10 years, please contact the RBF Enquiry Line on 1800 622 631 for more information.

RBF may pay a benefit if a member with Death and Incapacity Cover is unwell or injured and cannot work for a short period of time. The benefit paid may equal up to 75% of their salary for up to two years. This Temporary Incapacity Pension is available up to age 60 for most members. For members of TASSS or SFCSS, Temporary Incapacity Cover continues until age 65.

Retirement productsRBF provides a range of retirement products including a Life Pension and Allocated Pension, or members can simply manage their money using their Investment Account.

Allocated PensionAn Allocated Pension can be the key to a successful financial future. With an Allocated Pension members invest a lump sum and then choose a pension amount that suits their individual retirement needs. This amount must meet the minimum limit set by Commonwealth legislation. Cash withdrawals are also permitted from Allocated Pension Accounts.

Members who commence an Allocated Pension as part of Transition to Retirement cannot receive more than 10% of the account balance as their annual pension payment and cash withdrawals are not permitted. These restrictions will be lifted when a member fully retires or attains the age of 65.

As at 30 June 2011, 1,345 members were receiving an Allocated Pension.

Life PensionWith a Life Pension, RBF will pay the member an income for the rest of their life. If the member chooses to commence a reversionary pension, RBF will continue to pay two thirds of the Life Pension to their surviving spouse for the rest of their life following the member’s death.

The surviving spouse also has the option to commute all or part of the Life Pension to a lump sum at that time. Depending on how long a member and their spouse lives, the Life Pension might provide more income than they would have received as a lump sum benefit.

Generally, members can take a Life Pension if they have maintained continuous membership with RBF since before 15 May 1999. Members should talk to RBF if they are unsure about their entitlement.

As at 30 June 2011, 8,177 members were receiving a Life Pension.

Life Pensions are adjusted twice each year in line with changes in the Consumer Price Index (CPI). If the CPI is negative, the adjustment is deemed to be zero. During the 2010–11 financial year the CPI adjustments approved by the RBF Board were as follows:

1 July 2010 1.42%

1 January 2011 1.35%

Lump sum benefitWhen members retire after reaching preservation age, they have the option of taking the retirement benefit as a lump sum. The balance can be placed in the Investment Account for as long as the member wishes. Members should give careful consideration to funding their future needs if they withdraw all of their retirement savings from super.

Many members withdraw a small lump sum to pay for specific items at retirement and also establish an income stream to secure their financial future.

Simpler tax on superNo matter how members access their super at retirement, the good news is that all members will pay less tax and some members will pay no tax after age 60. By understanding how the tax rules affect their super, members can make the most of it.

Tasmanian Accumulation Scheme, Investment Account, Tasmanian Ambulance Service Superannuation Scheme, State Fire Commission Superannuation Scheme and Parliamentary Retiring Benefits Fund

Super benefits coming from these fully taxed superannuation schemes are exempt from tax when the member reaches the age of 60. Members who retire and access their super before they are 60 will continue to pay some tax until their 60th birthday.

Contributory Scheme and Parliamentary Superannuation Fund

Members of these partly taxed schemes will continue to pay tax when they access their super, even after the age of 60. Tax will be payable on up to 75% of members’ Contributory Scheme benefits. This represents the employer component of the final benefit, on which contributions tax has not been paid. After the member reaches age 60, they will pay a lower rate of tax on lump sum withdrawals. Pension payments will receive a 10% offset against this part of the benefit. The remaining employee component of the benefit will be tax-free after reaching age 60, based on current legislation.


Information servicesInformation about RBF products and services is provided through quarterly newsletters, the annual Member Report as well as the RBF website.

RBF makes the annual Member Report available to all members online. If members let us know that they would prefer a printed copy, one will be mailed to them.

RBF Enquiry Line Members can call the RBF Enquiry Line on 1800 622 631 to speak with staff trained and up to date with RBF’s superannuation scheme rules.

Personal serviceWhen a phone call is not enough, members can book an interview, via the RBF Enquiry Line, with one of RBF’s Superannuation Consultants who will devote their time to making sure members understand their super before they need to make a decision. Personal services are provided on a state wide basis, with offices located in Hobart and Launceston, together with member interviews provided in Devonport, Burnie and other regional workplaces upon request.

Workplace visitsBusiness Relationship Officers (BROs) provide information to employee and employer stakeholders in public sector workplaces throughout Tasmania. BROs are also able to organise for Superannuation Consultants and financial planners to conduct personal face to face interviews for members in workplaces throughout Tasmania.

13

Keeping members informed

RBF encourages members to invite an RBF representative to visit their workplace and provide a formal information session on a particular topic or simply have a general discussion on super, taking questions from the group.

Members who would like to invite an RBF Business Relationship Officer to their next staff meeting, conference, or professional development day can contact us by calling the RBF Enquiry Line on 1800 622 631.

Financial advice for membersRBF Financial Planning Pty Ltd provides financial planning advice to RBF members and their spouses. RBF Financial Planning is a wholly owned subsidiary of RBF. The Financial Planners are employees of RBF Financial Planning Pty Ltd and are specialists at providing advice about:

RBF schemes

wealth accumulation planning

managed investments

shares

superannuation

standard margin lending

portfolio review services

salary packaging

personal insurance (e.g. life insurance)

aged care and Centrelink matters.

RBF Financial Planning offers an ongoing service package which is aimed at assisting RBF members and their spouses to improve their financial situation and increase the likelihood that they meet their needs and objectives as they progress through life.

RBF Financial Planning charge members on the basis of a fee for service. Financial Planners are all paid a salary and do not receive bonuses or commissions.

All Financial Planners are licensed Authorised Representatives of RBF Financial Planning Pty Ltd, hold formal qualifications in financial planning and have extensive experience in superannuation.

Members can request financial advice from RBF Financial Planning by calling the RBF Enquiry Line on 1800 622 631 or by calling RBF Financial Planning on 1300 378 057. To get the most from the services offered by RBF Financial Planning Pty Ltd members are encouraged to first attend a personal interview with an RBF Superannuation Consultant.

RBF Financial Planning Pty Ltd (ABN 17 094 816 412, AFS Licence No 239171) is a wholly owned subsidiary of RBF and operates as separate legal entity.

Leanne (Communications Officer), RBF member


The Australian Securities and Investments Commission (ASIC) website also contains useful information in relation to the types of complaints handled by ASIC. To obtain further information, contact the ASIC on 1300 300 630 or visit www.asic.gov.au

If your concerns involve unethical conduct, you can raise your concerns by writing to the Financial Planning Association of Australia:

PO Box 109 Collins Street West Melbourne VIC 8007

Feedback and complaintsRBF and RBF Financial Planning Pty Ltd welcome all feedback from our members as it allows RBF to acknowledge staff doing a great job and to improve our service where required.

RBF Complaint

At RBF we strive to ensure our members receive the best possible service at all times, but sometimes our service might not meet your expectations. For this reason, RBF have a comprehensive complaint process to address member concerns.

Members who may be unhappy with the way RBF has handled an administrative matter are encouraged to contact the RBF Enquiry Line on 1800 622 631 and explain their concerns. We are keen to ensure our service is of the highest quality at all times and will assist members in finding an acceptable resolution.

Where the member’s concerns have not been addressed, they can write to:

RBF Complaint Retirement Benefits Fund Board GPO Box 446 HOBART TAS 7001

If a member’s complaint has been investigated and they are not satisfied with the response provided by RBF, the member has the option of lodging a complaint with the Tasmanian Ombudsman. The Ombudsman can be contacted via email at [email protected] or by calling 1800 001 170.

Further information about RBF’s complaint process can be found at www.rbf.com.au or by contacting RBF.

RBF Financial Planning Complaint Process

Contact your RBF Financial Planner about your complaint on 1300 378 057.

Hank (Plant Clerk), RBF member

If your complaint is not resolved to your satisfaction within five days, please contact:

The Responsible Manager on 1300 378 057 or Put your complaint in writing and send it to:

The Responsible Manager Complaints RBF Financial Planning Pty Ltd GPO Box 1447 HOBART TAS 7001

If the complaint is not resolved to your satisfaction, you can take your complaint to the Financial Ombudsman Service (FOS). The FOS can be contacted on 1300 780 808. This service is provided to you free of charge. RBF Financial Planning Pty Ltd is a member of FOS.


Every time we have dealt with RBF we have genuinely felt that our interests are paramount to them.Stephen (Retiree) and Anita (Midwife), RBF members


14

Financial statements for the year ended 30 June 2011


Retirement Benefits Fund Board Trustee’s Statement

In the opinion of the Retirement Benefits Fund Board (the Board) as Trustee of the Retirement Benefits Fund (the Fund):

1. the accompanying financial statements of the Fund are properly drawn up so as to present fairly the financial position of the Fund as at 30 June 2011 and the results of its operations and cashflows for the year ended on that date in accordance with Australian Accounting Standards and other mandatory professional requirements in Australia; and

2. the Fund has been conducted in accordance with the provisions of the;

Retirement Benefits Act 1993

Retirement Benefits (Parliamentary Superannuation Trustee Arrangements and Miscellaneous Amendments) Act 2002

Retirement Benefits Fund (State Fire Commission Superannuation Scheme) Act 2005

Retirement Benefits (Tasmanian Ambulance Service Superannuation Scheme) Act 2006

Tasmanian Accumulation Scheme Trust Deed

State Fire Commission Superannuation Scheme Trust Deed

Tasmanian Ambulance Service Superannuation Scheme Trust Deed

Signed in accordance with a resolution of the Retirement Benefits Fund Board.

John Wilcox Board Member Date: 5 October 2011

Damian Egan Board Member Date: 5 October 2011

52 Financial statements for the year ended 30 June 2011

Contributory Scheme Statement of net assets as at 30 June 2011

Note 2011 $ ‘000

2010 $ ‘000

ASSETS

Cash Assets

Cash at bank 2(e) 10,276 –

Receivables

Contributions and pensions 3(a) 1,106 4,330

Investment income accrued 3(b) 4,978 4,083

Other 3(c) 307 394

GST 186 231

Income tax 4(c) 30,770 21,513

Interfund 87,547 73,014

124,894 103,565

Investments

Australian equities 339,225 332,513

International equities 312,182 298,297

Diversified fixed interest 5 183,052 178,814

Property 244,422 245,422

Alternative investments 262,324 235,086

Cash deposits 57,668 71,939

1,398,873 1,362,071

Other assets

Plant, equipment and intangibles 1,555 2,867

RBF Financial Planning Pty Ltd 150 150

Deferred tax asset 4(d) 2,820 3,015

4,525 6,032

TOTAL ASSETS 1,538,568 1,471,668

LIABILITIES

Payables

Other 6 5,556 5,265

Contributions and pensions 2 559

5,558 5,824

Provisions

Contributions in advance 7 4,280 14,507

Provision for employee entitlements 8 16,985 18,126

21,265 32,633

Tax Liabilities

Deferred tax liability 4(e) 7,653 4,473

Superannuation contributions surcharge payable 2,098 2,327

9,751 6,800

TOTAL LIABILITIES 36,574 45,257

NET ASSETS AVAILABLE TO PAY BENEFITS 1,501,994 1,426,411

The above Statement of Net Assets should be read in conjunction with the accompanying notes.


Note 2011 $’000

2010 $’000

INVESTMENT REVENUE

Interest 9 10,331 9,172

Dividends 9 23,452 15,677

Distributions 9 27,453 27,887

Property rentals 9 2,388 2,788

Movement in net market value of investments 10 63,909 52,882

127,533 108,406

Less: direct investment expenses 5,500 5,129

Gross profit/(loss) on investment activities 122,033 103,277

CONTRIBUTION REVENUE

Employer contributions 227,253 229,400

Member contributions 31,729 34,752

258,982 264,152

OTHER NET REVENUE/(EXPENSE) 11 (1,304) (4,026)

TOTAL REVENUE 379,711 363,403

BENEFITS PAID

Pensions 204,567 186,639

Lump sums 85,798 107,902

Refunds and interest 22 374

290,387 294,915

EXPENSES

General administration expenses 12 18,484 13,122

Superannuation contributions surcharge 2(o) (8) 114

TOTAL EXPENSES 308,863 308,151

NET CHANGE FOR THE YEAR BEFORE INCOME TAX 70,848 55,252

INCOME TAX BENEFIT/(EXPENSE) 4(a) 4,735 (265)

NET CHANGE IN NET ASSETS AFTER INCOME TAX 75,583 54,987

NET ASSETS AVAILABLE TO PAY BENEFITS at the beginning of the financial year

1,426,411

1,371,424

NET ASSETS AVAILABLE TO PAY BENEFITS at the end of the financial year

1,501,994

1,426,411


Contributory Scheme Statement of changes in net assets for the year ended 30 June 2011


Contributory Scheme Notes to the financial statements for the year ended 30 June 2011

1. OPERATION OF THE FUND

The Contributory Scheme (the Scheme) is a defined benefit scheme, domiciled in Australia that provides benefits to its members pursuant to the provisions of the Retirement Benefits Act 1993. The address of the Scheme’s registered office is 39 Sandy Bay Road, Hobart, Tasmania, 7000.

Reforms to public sector superannuation, effective 15 May 1999, have resulted in the closure of the Scheme to public sector employees employed on or after that date.

The Trustee of the Scheme is the Retirement Benefits Fund Board (ABN: 97 724 593 931).

‘The Fund’ refers to the Retirement Benefits Fund as a whole when referenced throughout the financial statements and includes the following schemes;

RBF Contributory Scheme (the Scheme)

Tasmanian Accumulation Scheme (TAS)

Parliamentary Superannuation Fund (PSF)

Parliamentary Retirement Benefits Fund (PRBF)

State Fire Commission Superannuation Scheme (SFCSS)

Tasmanian Ambulance Services Superannuation Scheme (TASSS)

‘The Board’ refers to the Retirement Benefits Fund Board (ABN: 97 724 593 931) as Trustee of the Retirement Benefits Fund when referenced throughout the financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The financial report is a general purpose report which has been prepared in accordance with Australian Accounting Standard AAS 25 ‘Financial Reporting by Superannuation Plans’ (AAS 25) as amended by AASB 2005-13 ‘Amendments to Australian Accounting Standards (AAS 25)’, other applicable Accounting Standards, other mandatory requirements, the provisions of the Retirement Benefits Act 1993, the Tasmanian Accumulation Scheme Trust Deed, and relevant legislative requirements.

The financial statements were approved by the Board of Trustee, Retirement Benefits Fund Board on 5 October 2011).

The accounting policies adopted are consistent with those of the previous year, unless specifically stated.

(b) Statement of compliance

International Financial Reporting Standards (IFRS) form the basis of Australian Accounting Standards adopted by the Australian Accounting Standards Board (AASB). Certain requirements of AAS25 however differ from the equivalent requirements that would be applied under IFRS. Since AAS 25 is the principal standard that applies to the financial statements, other standards, including IFRS, are also applied where necessary except to the extent that they differ from AAS 25.

The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They have mandatory application dates for future reporting periods and the Scheme has decided not to early adopt.

AASB 9: Financial Instruments (December 2010) and AASB 2010-07: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 and 1038 and Interpretations 2, 5, 10, 12, 19 and 127) (applicable for annual reporting periods commencing on or after 1 January 2013). These standards are applicable retrospectively and amend the classification and measurement of financial assets. The Fund has not yet determined any potential impact on the financial statements.

AASB 2010–4: Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project (AASB 1, 7, 101, and 134) (applicable for annual reporting periods commencing from 1 January 2011). These standards detail numerous non-urgent but necessary changes to Accounting Standards arising from the International Accounting Standards Board’s annual improvements project. No changes are expected to materially affect the Fund.


AASB 2010-5: Amendments to Australian Accounting Standards (AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137, 140, 1023 and 1038 and Interpretations 112, 115, 127, 132 and 1042) (applicable for annual reporting periods commencing on or after 1 January 2011). This standard makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of IFRSs by the International Accounting Standards Board. However these editorial amendments have no major impact on the requirements of the respective amended pronouncements.

AASB 2010-6: Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets (AASB 1 and AASB 7) (applicable for annual reporting periods beginning on or after 1 July 2011). This standard adds and amends disclosure requirements about transfers of financial assets, especially those in respect of the nature of the financial assets involved and the risks associated with them. No changes are expected to materially affect the Fund.

If these accounting standards had been adopted, we do not believe that there would have been a material impact to either the statement of net assets for the year to 30 June 2011 or the statement of changes in net assets as at 30 June 2011.

(c) Significant accounting judgements, estimates and assumptions

The preparation of the financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in future periods affected.

The estimates and associated assumptions are based on experience and various other factors that are believed to be reasonable in the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities where they are not available from independent sources. The key estimates and assumptions that have a significant risk of causing a material adjustment to the values of assets and liabilities are:

Valuation of Accrued Benefits – The amount of accrued benefits has been actuarially determined. The key assumptions are discussed in note 13.

Valuation of Investments – The key assumptions are set out in note 2(d).

All amounts are presented in thousands of Australian Dollars unless otherwise stated.

(d) Investments

Investments of the Scheme are initially recognised at cost, being the fair value of the consideration given.

After initial recognition, investments and derivatives are measured at net market value in the statement of net assets as at reporting date. Movements in the net market value of investments and derivatives are recognised in the statement of changes in net assets in the periods in which they occur.

The net market value of investments has been determined as follows:

Cash and cash equivalents are valued at face value;

Listed equities are recorded at the ‘last’ price quoted on the exchange that the equity is listed less a provision for disposal costs;

Unlisted equities are valued at net market value using the valuation technique;

Bonds are measured at their capital fair value using the valuation technique;

Foreign exchange contracts are measured at fair value (the present value of all future cashflows);

Options and futures are recognised at their quoted published prices in an active market and on exchange bid or offer prices;

Direct properties are valued at their net market values as determined by an independent valuer; and

All other investments are valued at the net market value as assessed by the Board.

Contributory Scheme Notes to the financial statements for the year ended 30 June 2011 (continued)


The valuation technique includes the use of recent arm’s length market transactions, the current fair value of any other instrument that is significantly similar, discounted cashflow techniques, option pricing models or other valuation techniques that provide a reliable estimate of prices obtained.

The investments of the Scheme are managed on behalf of the Board by selected investment managers. Disclosure of the investment managers and the internally managed funds are appended to the Fund’s financial statements (Appendix D).

(e) Cash and cash equivalents

Cash and short-term deposits in the statement of net assets comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. There was an investment allocation decision during 2010 that the defined benefit schemes did not hold a share of the bank account. In 2011, under the administration of Mercer (Australia) Pty Ltd, all RBF schemes, where relevant, held a share of the bank account.

(f) Other receivables and other payables

Other receivables are carried at nominal amounts due, which approximate net market value. Sundry debtors are normally settled within 30 days. An allowance for uncollectible amounts is only made where there is objective evidence that the debt will not be collected. Prepayments are non-interest bearing and expensed over the terms of the relevant contract.

Other payables are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the Fund, and are carried at nominal amounts which approximate net market value. Sundry creditors and accrued expenses are normally settled on 30 day terms. The interfund receivables/payables are non-interest bearing and monitored on a monthly basis. These balances arise as a result of the rebalancing of the asset allocation and other transactions which have an effect on two or more sub-funds. The balance can fluctuate markedly between reporting periods due to the nature of the account and timing of the settlement.

(g) Accrued defined benefits

The liability for accrued defined benefits of the Scheme at 30 June 2011 is not included in the statement of net assets, the amount being reported by way of note (note 13).

The amount of accrued defined benefits are determined on the basis of the present value of expected future payments which arise from membership of the Scheme, to the measurement date. The figure reported in note 13 has been determined by reference to expected future salary levels and by application of a market-based, risk-adjusted discount rate and relevant actuarial assumptions.

A copy of a statement prepared by the Fund Actuary, Calculation of Vested and Accrued Benefits in accordance with AAS 25 for the Fund as at 30 June 2011 is appended to the financial statements (Appendix C).

(h) Employee entitlements

Provision is made for the Scheme’s liability for employee entitlements arising from services rendered by the Board’s employees to the end of the financial year. These benefits include annual leave, long service leave and superannuation. Employee entitlements expected to be settled within one year arising from salaries, annual leave and long service leave, have been measured at their nominal amount. Other employee entitlements, payable later than one year, have been measured at the present value of the estimated cash flow in respect of services provided by employees up to the reporting date. In determining the present value of future cash flows, the interest rates attaching to government securities, which have terms to maturity, approximating the terms of the related liability, are used.

Employee entitlement expenses are in respect of the following categories:

wages and salaries, annual leave, long service leave and sick leave;

other types of employee entitlements,

and are included on the statement of changes in net assets on a net basis in their respective categories.

Superannuation contributions to employees’ accumulation funds are charged as expenses when incurred. Increases in liabilities of employees’ defined benefit funds are charged as expenses when incurred.



(i) Revenue recognition

Revenue is recognised to the extent it is probable the economic benefits will flow to the Scheme and the revenue can be reliably measured. The following specific recognition criteria must be met before revenue is recognised:

Movement in net market values

Changes in the net market value of investments are calculated as the difference between the net market value at sale, or at balance date, and the net market value at the previous valuation point. All changes are recognised in the statement of changes in net assets.

Contributions Revenue

Contributions are recognised when control of the asset has been attained and are recorded, gross of any tax, in the period to which they relate.

Interest

Interest revenues are recognised when the control of the right to receive consideration for the provision of, or investment in, assets has been attained.

Dividends

Dividends on quoted equities are recognised on the date the dividend is declared.

Distributions

Distributions are recognised as at the date the unit value is quoted ex-distribution and where not received at reporting date, are reflected in the statement of net assets as a receivable at net market value.

Rent Income

Rent on the Scheme’s internally managed Direct Property portfolio is recorded on an accrual basis.

(j) Foreign currency

Both the functional and presentation currency of the Fund is Australian Dollars.

Cash and investment transactions in foreign currencies are translated at the foreign currency exchange rate ruling at the date of the transaction into the portfolio currency equivalents (the ‘functional currency’).

Subsequent foreign denominated cash and investments are re-valued, using the exchange rate at the reporting date into the functional currency. Foreign currency exchange differences arising on translation and realised gains and losses on disposals or settlements of monetary assets and liabilities are recognised in the statement of changes in net assets in the period in which they arise.

(k) Leases

Leases are classified at their inception as either an operating or finance lease based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Operating leases

The minimum lease payments of operating leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are recognised as an expense on a straight-line basis in the periods in which they are incurred.

(l) Income tax

The Scheme is part of a complying superannuation fund for the purposes of the provisions of the Income Tax Assessment Act. Accordingly, the concessional tax rate of 15% has been applied to the Scheme’s taxable income.

Income tax on the statement of changes in net assets for the year comprises current and deferred tax. Income tax is reflected in the statement of changes in net assets.



Tax-effect accounting is applied using the liability method whereby income tax is regarded as an expense and is calculated on the accounting profit after allowing for permanent differences. To the extent timing differences occur between the time items are recognised in the financial statements and when items are taken into account in determining taxable income the net related taxation benefit or liability, calculated at current rates is disclosed as a deferred tax asset or a deferred tax liability. The net deferred tax asset, relating to tax losses and timing differences, is not carried forward as an asset, unless the benefit has a high probability of being realised. Capital gains tax applicable on unrealised investment gains or losses has been included in the income tax expense.

The deferred tax liability would be expected to be settled 12 months or more from the reporting date as it relates to investments which are maintained for a long-term objective.

(m) Goods and services tax (GST)

Revenues are recognised net of the amount of GST where applicable. Expenses and assets are also recognised net of the amount of GST where applicable to the extent that the GST is recoverable from the Australian Taxation Office (ATO). Where GST is not recoverable, it is recognised as part of the cost of acquisition of the asset or as an expense item as applicable.

Receivables and payables are stated inclusive of GST.

The net amount of GST recoverable from the taxation authority is included as part of receivables in the statement of net assets.

(n) No Tax File Number (TFN) Contributions Tax

Where a member does not provide their TFN to the Fund, the Fund may be required to pay no-TFN contributions tax at a rate of 31.5% on contributions received from and on behalf of the member. The no-TFN contributions tax applies in addition to the concessional contributions tax rate of 15% applicable to such contributions.

A no-TFN contributions tax liability recognised by the Fund will be charged to the relevant member’s no-TFN contributions tax liability and the tax offset will be included in the relevant member’s account.

(o) Superannuation contributions surcharge

The Superannuation Laws Amendment (Abolition of Surcharge) Act 2005 abolishes both the superannuation contributions surcharge and the termination payments surcharge in respect of superannuation contributions and certain termination payments made or received on or after 1 July 2005. Assessments for surcharge in respect of contributions and payments for the year ended 30 June 2005 and prior years will continue to be issued and remain payable. Interest will continue to be debited to outstanding balances on members account.

Superannuation Contribution Surcharge is levied on surchargeable contributions for a relevant year on the basis of the individual member’s adjusted taxable income for that year. The liability for the Superannuation Contribution Surcharge is recognised when the assessment is received, as the Board considers this is when it can be reliably measured.

The amount of the liability brought to account at balance date in respect of the financial years ended 30 June 1997 through to 30 June 2005 has been based on the actual surcharge calculated by the Australian Taxation Office and reported to the Board. The superannuation surcharge liability recognised by the Board has been charged to the relevant member’s accounts.

In 2011, as part of outsourcing the Fund’s member administration platform to Mercer (Australia) Pty Ltd, a review of the Superannuation Contribution Surcharge paid and owing was performed. As a result of this review, revised assessments from prior years were received from the ATO and refunds were issued.

(p) Plant, equipment and intangibles

Fixtures and fittings, computer hardware, other plant and equipment and intangibles, including work in progress, are recorded at historic cost less accumulated depreciation and amortisation. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of projects and self-constructed assets includes the cost of materials and directly labour and any other costs directly attributable to bringing the asset to a working condition of its intended use.

All applicable items of plant, equipment and intangibles having a limited useful life are systematically depreciated or amortised over their useful lives in a manner which reflects the consumption of their service potential.



(q) Benefits payable

Benefits payable comprise the entitlements of members who ceased employment or were entitled to an invalidity withdrawal prior to year end but had not been paid at that time. Benefits payable are normally settled within 30 days.

(r) Provisions

Provisions are recognised when there is a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(s) Comparatives

Where necessary, comparatives have been reclassified and repositioned for consistency with current year disclosures.

3. RECEIVABLES

(a) Contributions and pensions receivables:

2011 $’000

2010 $’000

Exit debtors – 3,327

Pension debtors 925 425

Contribution debtors 181 578

1,106 4,330

Exit debtors consist of lump sum payments, resulting from members satisfying required conditions of release, owed by Tasmanian state government departments and other agencies to the Scheme at year end. Pension debtors consist of ongoing fortnightly claims owed to the Scheme from Tasmanian state government departments and other agencies for retired members. Contribution debtors consist of employer and member contributions owed by Tasmanian state government departments and other agencies to the Scheme at year end.

(b) Investment income accrued:

2011 $’000

2010 $’000

Investment income accrued 4,978 4,083

Investment income accrued consists of distributions and interest declared at year end but not yet received.

(c) Other receivables:

2011 $’000

2010 $’000

Recoverable within 12 months Reimbursement from RBF Financial Planning Pty Ltd – 47

Prepayments 307 347

307 394

Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value. The maximum exposure to credit risk, in respect to debtors, is the fair value of receivables.



4. INCOME TAX

As the Fund is an exempt public sector superannuation scheme, it is deemed to be a complying superannuation fund for tax purposes. Accordingly, the Scheme is taxed at the rate of 15% on net investment earnings, employer contributions and capital gains, with deductions allowable for administration expenses, but not benefits paid. A reconciliation of income tax expense, with revenues and expenses for the year before income tax is shown below.

(a) The components of the income tax (expense)/benefit comprise:

2011 $’000

2010 $’000

Current tax benefit/(expense) 5,616 (3,444)

Deferred tax (expense)/benefit (2,460) 687

Over/(under) provisions prior years – current tax 2,494 3,904

Over/(under) provisions prior years – deferred tax (915) (1,412)

Income tax benefit/(expense) 4,735 (265)

(b) The prima facie tax on change in net assets before income tax is reconciled to the income tax (expense)/benefit as follows:

2011 $’000

2010 $’000

Prima facie tax expense on change in net assets before income tax at 15%

(10,627) (8,288)

Tax effect of:

Tax credits (gross up) (1,515) (748)

Non deductible expenditure (30) (45)

Benefits paid (43,558) (44,237)

(45,103) (45,030)

Tax effect of:


Untaxed contributions 26,320 27,234

Pre July 1988 funding credits 1,500 1,500

Exempt investment income (405) 374

Discount on realised (losses)/gains (339) 24

Discount on unrealised losses 3,814 2,233

Pension exemption 13,603 9,074

Death and invalidity-tax deduction 975 902

Death and invalidity-recovery from sub-fund (977) (860)

Net recoveries from sub-funds (132) 94

Other (13) (16)

49,105 45,772

Tax effect of:

Over/(under) provision for prior years (note 4(a)) 1,579 2,492

Tax credits 9,781 4,789

11,360 7,281

Income tax benefit/(expense) 4,735 (265)



(c) Balances as at 30 June:

2011 $’000

2010 $’000

Income tax receivable 30,770 21,513

Comprises

Amounts receivable from sub funds 30,983 30,544

Amounts (payable to)/receivable from the ATO (213) (9,031)

(d) Deferred tax asset:

Opening balance

Charge to statement

of change in net assets

Closing balance

Investment income 116 (17) 99

Administration expenses 2,934 (180) 2,754

Pensions (35) 2 (33)

Balance as 30 June 2011 3,015 (195) 2,820

Investment income 163 (47) 116

Administration expenses 2,513 421 2,934

Pensions (68) 33 (35)

Balance as 30 June 2010 2,608 407 3,015

(e) Deferred tax liability:

Opening balance

Charge to statement


Closing balance

Contributions 97 (48) 49

Unrealised capital losses (1,861) 4,763 2,902

Administration expenses 57 – 57

Pension adjustment 6,180 (1,535) 4,645

Balance as 30 June 2011 4,473 3,180 7,653

Contributions – 97 97

Unrealised capital losses (2,173) 312 (1,861)

Administration expenses 62 (5) 57

Pension adjustment 5,452 728 6,180

Balance as 30 June 2010 3,341 1,132 4,473



5. INVESTMENTS

Diversified Fixed Interest Investments

2011 $’000

2010 $’000

Other diversified fixed interest 109,712 85,771

Mortgages 73,340 93,043

Total diversified fixed interest investments 183,052 178,814

Movement in provision for mortgage defaults

Opening balance 1 July – 940

Amounts adjusted – (940)

Closing balance 30 June – –

6. OTHER PAYABLES

2011 $’000

2010 $’000

Due within 12 months

Sundry creditors and accrued expenses 5,556 5,265

Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.

7. CONTRIBUTIONS IN ADVANCE

The Retirement Benefits Regulations 1994 require the Board to maintain separate accounts for various monies paid to the Scheme. In 1993 a contribution was received in advance which covered the expected liability, of all current and former members of the Scheme who were previously employed by the Tasmanian Government Insurance Office (TGIO).

The State Actuary provided a review, dated 23 December 2009, of the liability as at 30 June 2009 in respect of the former TGIO employees. The State Actuary noted that a surplus in excess of the actual liability had built up since the commencement of these accounts. The State Actuary recommended that these accounts be reduced by $9.7M.

The Board approved and transferred the $9.7M surplus to the Tasmanian Government in September 2010.

The closing balance at 30 June 2011 represents the future actuarial liability for former TGIO employees.

2011 $’000

2010 $’000

Opening balance 1 July 14,507 14,688

Additional provisions (178) 229

Amounts used/adjusted (349) (410)

Surplus transferred to Tasmanian Government (9,700) –

Closing balance 30 June 4,280 14,507



8. PROVISION FOR BOARD EMPLOYEE ENTITLEMENTS

2011 $’000

2010 $’000

Provision for long service leave 508 759

Provision for annual leave 701 775

Provision for superannuation (note 23) 15,776 16,592

16,985 18,126

Opening balance 1 July 18,126 17,053

Additional provisions 1,917 4,314

Amounts used/adjusted (3,058) (3,241)

Closing balance 30 June 16,985 18,126

The number of employees at year end was: 155 174

9. INVESTMENT REVENUE

2011 $’000

2010 $’000

Asset class dissection



Diversified fixed interest 8,660 9,770

Property 9,426 8,220



63,624 55,524

Income type dissection

Interest 10,331 9,172

Dividends 23,452 15,677

Distributions 27,453 27,887

Property rentals 2,388 2,788

63,624 55,524



10. MOVEMENTS IN NET MARKET VALUE OF INVESTMENTS

2011 $’000

2010 $’000

Investments held at the end of the financial year


International equities 7,295 732

Diversified fixed interest 5,081 (3,342)

Property 7,735 (3,093)

Alternative investments 10,049 (2,752)

Cash 390 1,362

Total unrealised gains/(losses) 37,025 (5,010)

Investments realised during the financial year




Property (320) 689

Alternative investments (1) –

Cash 36 (1)

Total realised gains 26,884 57,892

Total change in net market value of investments 63,909 52,882

11. OTHER REVENUE/(EXPENSE)

2011 $’000

2010 $’000

Fund contributions to the Tasmanian Accumulation Scheme (41) (4)

Movement in net market value of internal use assets (depn) (1,335) (4,148)

Miscellaneous Interest 28 69

Cost recoveries 20 20

Medical fund commissions 20 20

Profit on sale of equipment 2 16

Family law fees 2 1

(1,304) (4,026)

12. ADMINISTRATION FEES PAID TO THE BOARD

2011 $’000

2010 $’000

Administration fee paid to the Board 24,207 22,098

Transformation costs paid to trustee 4,888 –

Recoveries from sub-funds (10,611) (8,976)

18,484 13,122

The Board charges the Fund a monthly administration fee based on the actual expenses incurred in the normal course of the Fund’s operation.

On 29 April 2011 the member administration platform of the Fund was outsourced to Mercer (Australia) Pty Ltd. The costs incurred by the outsourcing project together with the associated redundancy program are included as part of the administration fee paid to the trustee.



13. TOTAL ACCRUED BENEFITS FOR THE CONTRIBUTORY SCHEME AS A WHOLE

The liability for accrued benefits represents the Scheme’s present obligation to pay benefits to members and beneficiaries and has been determined on the basis of the present value of expected future payments which arise from the membership of the Scheme up to the reporting date.

The figure reported has been determined by reference to the expected future salary levels and by application of a market-based, risk-adjusted discount rate and relevant actuarial assumptions. The Accrued Benefits were last valued at 30 June 2011 and that measurement has been disclosed.

2011 $’000

2010 $’000

Accrued Benefits as at 30 June 5,512,551 5,623,345

In accordance with policy note 2(g) and Appendix C these accrued benefits are not recognised in these financial statements.

14. TOTAL VESTED BENEFITS FOR THE CONTRIBUTORY SCHEME AS A WHOLE

Vested benefits are benefits which are not conditional upon continued membership of the Scheme (or any factor other than resignation from the Scheme) and include benefits which members were entitled to receive had they terminated their membership as at the reporting date.

2011 $’000

2010 $’000

Vested Benefits as at 30 June 5,882,417 5,751,570

15. GUARANTEED BENEFITS

The vested benefits referred to in note 14 are guaranteed under the Retirement Benefits Regulations 1994 by the Treasurer.

16. FUNDING ARRANGEMENTS

Employer obligations to the Scheme, which vary in line with employee contributions, are unfunded, being financed on an ‘emerging cost’ basis. Employee contributions, which are fully funded by the members and vest fully in them, are made at a specified rate of salary. The unfunded liability is reflected in the difference between the net assets available to pay benefits and the amount of accrued benefits as at the reporting date. Movement in the unfunded liability since 30 June 2008 is shown in the following table:

2011 $’000

2010 $’000

2009 $’000

2008 $’000

Accrued benefits 5,512,551 5,623,345 5,194,653 4,555,983

Net assets available to pay benefits

1,501,994

1,426,411

1,371,424

1,557,606

Unfunded liability 4,010,557 4,196,934 3,823,229 2,998,377

The 2007 accrued benefits figure has been used for 2008 as no actuarial report was produced at 30 June 2008.



17. AUDITOR’S REMUNERATION

External 2011 $’000

2010 $’000

Amounts received or due and receivable by the Tasmanian Audit Office

– Audit of financial statements 172 158

Internal 2011 $’000

2010 $’000

Amounts received or due and receivable by KPMG Australia

– Various internal audit projects 146 88

18. INSURANCE

The Fund provides death and disability benefits to members. The Fund is a self insurer and provision for any liability is taken into account in the actuarial assessment of the accrued benefits at the time of actuarial valuation.

19. OPERATING COMMITMENTS

(a) The Board participates in non-cancellable leasing arrangements for motor vehicles it uses.

Under these arrangements the RBF Board:

is not required to purchase the motor vehicles at the end of the lease period,

the lessee is Fleet Australia and the lessor is the Tasmanian Department of Treasury and Finance, with the Board being the sub lessor of the motor vehicles,

there are no restrictions imposed by the lease arrangements.

(b) The total amount of lease expense recognised in the financial year was:

2011 $’000

2010 $’000

Lease expense recognised 46 58

(c) The minimum lease payments under the lease are:

2011 $’000

2010 $’000

not later than one year 5 24

later than one year and not later than five years – 3

(d) There are no contingent leases.

(e) The Board has a Superannuation Administration Services Agreement with Mercer (Australia) Pty Ltd. The term of the agreement is until May 2016 and the fee for service is based on a per member per fund schedule.

(f) The Board has a global custody agreement with JP Morgan. This contract is ongoing.



20. BOARD/KEY MANAGEMENT PERSONNEL COMPENSATION

The names and positions held by the Board and key management personnel in office at any time during the financial year:

Board/Key Management Person

Position

Mr D Egan President of the RBF Board

Mr D Challen Deputy President of the Board (commenced 1 November 2010)

Ms A Schiwy Deputy President of the Board (resigned 31 October 2010)

Ms E Thomas Board Member

Ms N Ellis Board Member

Mr L Jones Board Member

Mr J Wilcox Board Member

Mr. J Harman Board Member

Mr P Mussared Chief Executive Officer

Mr A Bellamy Chief Financial Officer

Mr N Connor Chief Operations Officer (commenced 4 January 2011)

Dr I Lundy Chief Investments Officer (commenced 15 March 2011)

Ms N Nelson Chief Risk Officer

Mr T Baker Program Manager – Registrable Superannuation Entity

Mr J Mazengarb General Manager – Corporate Support (commenced 4 January 2011)

Mr L Roberts Executive Manager Investment Product and Trustee Services (resigned 28 January 2011)

Mr A Davey Executive Manager Business Integrity and Improvement (resigned 13 August 2010)

Mr R Mackenzie Executive Manager Member Services (resigned 4 February 2011)

Mr D Ambroz Executive Manager Member Administration (resigned 29 April 2011)

The compensation received or receivable by the Board and key management personnel of the Fund:

Compensation 2011 $’000

2010 $’000

Short term employee benefits 1,440 1,201

Post employment benefits 130 97

Other long term benefits – 102

Termination benefits 373 21

21. RELATED PARTY TRANSACTIONS

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

There have been no related party transactions between the Board or key management personnel during the year.

Interfund transactions arise in the normal course of business and are treated as a receivable or payable at year end in line with fund policy note 2(f).

22. FINANCIAL INSTRUMENTS

The disclosure requirements of the Accounting Standard AASB 7 Financial Instruments: Disclosures is appended to the financial statements (Appendix A).



23. THE BOARD’S EMPLOYEE ENTITLEMENTS AND SUPERANNUATION COMMITMENTS

Employees of the Board employed prior to 15 May 1999 were entitled to become members of the Scheme. The Scheme is a defined benefit fund which pays lump sum and pension benefits to members upon retirement (the majority of which are calculated as a multiple of the member’s final average salary). Employer contributions are funded on an emerging cost basis and have not been fully funded by the Board at balance date. An actuarial assessment of the net present value of the future cost has been raised as a liability in the statement of net assets (see note 8). Below are set out details of the key assumptions and other disclosures as required by AASB 119 Employee Benefits. The figures include the liability for the Scheme members and pensioners as well as members (ex-employees) who hold a Compulsory Preservation Account.

The 30 June 2011 disclosures required under paragraph 120A of AASB 119, shown in the table below, have been calculated using 31 March 2011 actuals and actuarial assumptions.

Accounting Policy – Para 120A(a)

Actuarial gains and losses are recognised immediately in the statement of changes in net assets in the year in which they occur.

Fund Information – Para 120A(b)

Defined benefit members receive lump sum benefits on resignation and lump sum or pension benefits on retirement, death or invalidity. The defined benefit section of the Scheme is closed to new members. All new members receive accumulation only benefits.

Reconciliation of the Defined Benefit Obligation – Para 120A(c)

Financial year ending 2011 $’000

2010 $’000

Present value of defined benefit obligations at beginning of the year 21,901 20,036

(+) Current service cost 547 494

(+) Interest cost 1,154 1,127

(+) Estimated contributions by plan participants 192 181

(+) Actuarial (gains)/losses (1,353) 1,905

(–) Estimated benefits paid 2,133 1,792

(–) Estimated taxes, premiums and expenses paid 51 50

Present value of defined benefit obligations at end of the year 20,257 21,901

Reconciliation of the Defined Benefit Obligation – Para 120A(d)

The defined benefit obligation consists entirely of amounts from plans that are wholly or partly funded.

Reconciliation of the Fair Value of Scheme Assets – Para 120A(e)


2010 $’000

Fair value of plan assets at beginning of the year 5,309 5,204

(+) Expected return on plan assets 370 366

(+) Actuarial gains/(losses) (746) (110)

(+) Estimated employer contributions 1,540 1,510

(+) Estimated contributions by plan participants 192 181

(–) Estimated benefits paid 2,133 1,792

(–) Estimated taxes, premiums and expenses paid 51 50

Fair value of plan assets at end of the year 4,481 5,309



Reconciliation of the Assets and Liabilities Recognised in the Statement of Net Assets – Para 120A(f)

As at 2011 $’000

2010 $’000

Defined Benefit Obligation 20,257 21,901

(–) Fair value of plan assets 4,481 5,309

Deficit/(surplus) 15,776 16,592

Net superannuation liability/(asset) 15,776 16,592

Current net liability 407 491

Non-current net liability 15,369 16,101

Expense Recognised in Statement of Changes in Net Assets – Para 120A(g)


2010 $’000

Service cost 547 494

Interest cost 1,154 1,127

Expected return on assets (370) (366)

Actuarial loss/(gain) (607) 2,016

Superannuation expense/(income) 724 3,271

Fund Assets – Para 120A(j)

The percentage invested in each asset class at the Statement of Net Assets date:

As at 2011 2010

Australian Equity 25% 26%

International Equity 22% 22%

Fixed Income 13% 12%

Property 19% 20%

Alternatives/Other 18% 14%

Cash 3% 6%

Fair Value of Fund Assets – Para 120A(k)

Assets are not held separately for each authority but are held for the Scheme as a whole. The fair value of Scheme assets was estimated by allocating the total Scheme assets to each authority in proportion to the value of each authority’s funded liabilities, calculated using the assumptions outlined in this report.

The fair value of Fund assets includes no amounts relating to:

any of the authority’s own financial instruments

any property occupied by, or other assets used by, the authority.

It is not possible to separately identify and allocate assets attributable to employees of the board.

Expected Rate of Return on Fund Assets – Para 120A(l)

The expected return on assets assumption is determined by weighting the expected long-term return for each asset class by the target allocation of assets to each asset class and allowing for the correlations of the investment returns between asset classes. The returns used for each asset class are net of estimated investment tax and investment fees.



Actual Return on Fund Assets – Para 120A(m)


2010 $’000

Actual return on plan assets^ (376) 255

^as separate assets are not held for each authority, the actual return includes any difference in the allocation to each authority.

Principal Actuarial Assumptions at the Statement of Net Assets Date – Para 120A(n)

As at 2011 2010

Discount rate 5.50% pa 5.35% pa

Expected rate of return on plan assets 7.50% pa 7.00% pa

Expected salary increase rate 4.50% pa 4.50% pa

Expected rate of increase compulsory preserved amounts 4.50% pa 4.50% pa

Expected pension increase rate 2.50% pa 2.50% pa

The discount rate is based on the market yields on the longest dated Government bonds as at 30 June 2011 extrapolated to allow for the fact that the term of the liabilities exceeds the term of the longest Government bond. The decrement rates used for mortality and retirement have been updated since the last valuation and are described in the Actuarial Assumptions section below.

Operating Costs

Operating costs for the Scheme as a whole have been assumed to be incurred at the rate of 1.5% of salaries plus 1.0% of pensions in payment. This cost has then been allocated to each authority in proportion to assets.

Temporary Invalidity Expense

The cost of temporary invalidity benefits has been assumed to be 0.2% of salaries of current contributory members. This cost has then been allocated to each authority in proportion to assets.

Historical Information – Para 120A(p)


2010 $’000

2009 $’000

2008 $’000

2007 $’000

Present value of defined benefit obligation

20,257 21,901 20,036 18,305 18,976

Fair value of plan assets 4,481 5,309 5,204 5,326 5,899

(Surplus)/deficit in plan 15,776 16,592 14,832 12,979 13,077

Experience adjustments (gain)/loss – plan assets

746

110

105

886

(808)

Experience adjustments (gain)/loss – plan liabilities

(936)

474

2,859

(41)

312

The experience adjustment for Scheme liabilities represents the actuarial loss (gain) due to a change in the liabilities arising from the Scheme’s experience (e.g. membership movements, salary increases and indexation rates) and excludes the effect of the changes in assumptions (e.g. movements in the bond rate).

Expected Contributions – Para 120A(q)


Expected employer contributions 407



24. SUBSEQUENT EVENTS

A significant portion of the Fund’s investment portfolio is exposed to Australian and international listed investment markets and consequently it is subject to the associated market risk. From balance date up to the date the financial statements were certified and authorised for issue by the Board Australian and international markets experienced a period of significant volatility. For more detail on the price risk associated with these markets please refer to the Fund’s financial instruments disclosures which are appended to the financial statements (Appendix A).

25. SEGMENT INFORMATION

The Scheme operates solely in the business of provision of benefits to members and operates in Australia only.

26. CONTINGENT LIABILITIES

Estimate of the potential financial effect of contingent liabilities that may become payable:

As at 30 June 2011, there were two (2) instances of litigation currently involving the Board.

These matters concern applications being made to the Supreme Court of Tasmania by members of the Fund with respect to decisions of the Board pursuant to regulation 126 of the Retirement Benefits Regulations 2005. The total liability for these matters including legal costs has been estimated to be $180,000.

There is also one instance of an unresolved claim having been made against the Board by a member who is seeking compensation for financial loss suffered due to a delay in determining that member’s eligibility to receive an invalidity benefit. An offer of settlement has been made with respect to that claim. It is also anticipated that the same member will seek a declaration from the Supreme Court pursuant to regulation 127 of the Retirement Benefits Regulations 2005 regarding issues surrounding the calculation of the invalidity benefit. The total liability for this matter including legal costs has been estimated to be $150,000.

These applications are currently being defended, but Legal Counsel is not able to predict the outcomes with any certainty.

2011 $’000

2010 $’000

Contingent liabilities 330 –



Note 2011 $’000

2010 $’000

ASSETS

Cash Assets

Cash at bank 2(e) 9,364 11,133

Receivables

Investment income accrued 4 281 419

281 419

Investments




Property 232,238 195,738



2,371,834 2,033,372

Other Assets


TOTAL ASSETS 2,402,778 2,069,496

LIABILITIES

Payables

Other 7 264 422

Contributions 6 689

Interfund 72,994 60,041

73,264 61,152

Provisions

General operating provision 8(a) 20,215 14,111

Provision for death & incapacity insurance 8(b) 17,477 15,056

37,692 29,167

Tax Liabilities

Provision for income tax 6(c) 30,440 28,766

Superannuation contributions surcharge 14 22

30,454 28,788


NET ASSETS AVAILABLE TO PAY BENEFITS 2,261,368 1,950,389

Represented by:

LIABILITY FOR ACCRUED BENEFITS

Allocated to members’ accounts 11 2,210,363 1,929,202

Not yet allocated 12,850 1,948

Reserves 9 38,155 19,239

2,261,368 1,950,389


Tasmanian Accumulation Scheme Statement of financial position as at 30 June 2011


Note 2011 $’000

2010 $’000

INVESTMENT REVENUE

Interest 12 33,187 26,506

Dividends 12 45,222 24,341

Distributions 12 31,512 30,566

Property rentals 12 2,137 2,545

Movement in net market values of investments 13 84,749 66,227

196,807 150,185

Less: direct investment expenses 9,071 7,043

Gross profit/(loss) on investment activities 187,736 143,142




Transfers in 184,165 220,868

Other contributions 14 41 4

485,422 503,250

OTHER REVENUE – general operating provision & reserves 9 (4,209) 19,239


EXPENSES

General operating fee – administration component 8,725 7,598

General operating fee – taxation component (credit)/charge 4,057 (10,017)

Death & incapacity insurance fee 8(b) 6,374 5,734

Superannuation contributions surcharge 2(m) (11) 74


BENEFITS ACCRUED AS A RESULT OF OPERATIONS BEFORE INCOME TAX

649,804

662,242

INCOME TAX EXPENSE 6(a) (32,907) (33,699)

BENEFITS ACCRUED AS A RESULT OF OPERATIONS AFTER INCOME TAX

616,897

628,543

BENEFITS PAID 305,918 298,973

LIABILITY FOR ACCRUED BENEFITS at the beginning of the financial year

1,950,389

1,620,819

LIABILITY FOR ACCRUED BENEFITS at the end of the financial year 2,261,368 1,950,389


Tasmanian Accumulation Scheme Operating statement for the year ended 30 June 2011


Note 2011 $’000

2010 $’000

CASH FLOWS FROM OPERATING ACTIVITIES



Other contributions 41 4

Transfers from other funds 184,165 220,868

Interest received 8,334 13,565

Dividends received 87 3,143

Distributions received 2,078 11,576

Property and alternative investment returns 2,137 2,545

Other revenue – general operating provision (3,486) 723

Benefits paid (305,918) (298,907)

Direct investment expenses (7,147) (6,077)

Management fee paid (9,325) (7,493)

Income tax paid (27,960) (25,186)

Interfund transfers 12,953 17,493

Death & incapacity benefits deducted (3,953) (6,000)

Superannuation contributions surcharge paid 3 (101)

NET CASH FLOWS FROM OPERATING ACTIVITIES 15(a) 152,542 208,924

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of investments (950,414) 1,087,830

Payments for purchase of investments 796,543 (1,326,835)

NET CASH FLOWS USED IN INVESTING ACTIVITIES (153,871) (239,005)

NET DECREASE IN CASH HELD (1,329) (30,081)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR

392,472

422,553

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR

15(b)

391,143

392,472


Tasmanian Accumulation Scheme Statement of cash flows for the year ended 30 June 2011



The Tasmanian Accumulation Scheme (TAS) is an accumulation scheme, domiciled in Australia, established under the Public Sector Superannuation Reform Act 1999. It provides eligible employees with the minimum superannuation guarantee support under the Tasmanian Accumulation Scheme Trust Deed 17 April 2000 which took effect on 25 April 2000.

In October 2010 the RBF Investment Account (an accumulation scheme) and the TAS were merged from a member perspective and a reporting perspective. The net assets available to pay benefits of the RBF Investment Account as at 31 October 2010 were $1,369,285,000, and $1,291,264 as at 30 June 2010. The 2011 results and 2010 comparatives have been combined accordingly. The address of TAS’s registered office is 39 Sandy Bay Road, Hobart, Tasmania, 7000.

The Trustee of TAS is the Retirement Benefits Fund Board (ABN 97 724 593 931).



Refer to note 2(a) of the Notes to the Financial Statements of the Scheme.


Refer to note 2(b) of the Notes to the Financial Statements of the Scheme.







(d) Investments

Refer to note 2(d) of the Notes to the Financial Statements of the Scheme.


Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purpose of the statement of cash flows, cash includes cash at bank and cash deposits that are readily convertible to cash on hand and that are used in the cash management function on a day-to-day basis.


Refer to note 2(f) of the Notes to the Financial Statements of the Scheme.

Tasmanian Accumulation Scheme Notes to the financial statements for the year ended 30 June 2011


(g) Accrued benefits

The liability for accrued benefits is TAS’s present obligation to pay benefits to members and beneficiaries. This has been calculated as the difference between the carrying amount of the assets and the carrying amount of the sundry liabilities and income tax liabilities as at the reporting date.

(h) Revenue recognition

Refer to note 2(i) of the Notes to the Financial Statements of the Scheme.

(i) Foreign currency

Refer to note 2(j) of the Notes to the Financial Statements of the Scheme.

(j) Income tax

Refer to note 2(l) of the Notes to the Financial Statements of the Scheme.

(k) Goods and services tax (GST)

Refer to note 2(m) of the Notes to the Financial Statements of the Scheme.

(l) No Tax File Number (TFN) Contributions Tax

Refer to note 2(n) of the Notes to the Financial Statements of the Scheme

(m) Superannuation contributions surcharge

Refer to note 2(o) of the Notes to the Financial Statements of the Scheme.

(n) Provisions

Refer to note 2(r) of the Notes to the Financial Statements of the Scheme.

(o) Comparatives

Refer to note 2(s) of the Notes to the Financial Statements of the Scheme.

(p) Reserves

Reserves are established and maintained to protect TAS and its members against the financial effects of possible future adverse risk events, to fund initiatives to ensure that TAS is able to continually develop in line with the needs of members and for future expenditure where there are no sources of future external funding.


On 25 April 2000, the initial account balances of TAS, being the account balances of the Non-Contributory Scheme as at that date, were funded using surplus assets from within the Contributory Scheme, adjusted to take account of the income taxation differences between the two schemes.

During 2011 employers contributed to TAS at the rate of 9% of the gross salaries of those employees who were members’ of the scheme.

Allocated, Transition to Retirement Allocated and Term Allocated pensions are fully funded by members.

Tasmanian Accumulation Scheme Notes to the financial statements for the year ended 30 June 2011 (continued)


4. RECEIVABLES

2011 $’000

2010 $’000

Investment income accrued 281 419


5. INVESTMENTS


2011 $’000

2010 $’000


Mortgages 84,927 78,319






6. INCOME TAX

As the Fund is an exempt public sector superannuation scheme, it is deemed to be a complying superannuation fund for tax purposes. Accordingly, the Account is taxed at the rate of 15% on net investment earnings, employer contributions and capital gains, with deductions allowable for administration expenses, but not benefits paid. A reconciliation of income tax expense, with revenues and expenses for the year before income tax is shown below.


2011 $’000

2010 $’000

Current tax (expense)/benefit (30,440) (28,766)

Deferred tax benefit (3,380) (5,180)

Over/(under) provisions prior years - current tax 806 (197)

Over/(under) provisions prior years - deferred tax 107 444

(32,907) (33,699)



(b) The prima facie tax on benefits accrued before income tax is reconciled to the income tax (expense)/benefit as follows:

2011 $’000

2010 $’000

Prima facie tax expense on benefits accrued before income tax at 15% (97,471) (99,336)

Tax effect of:

Tax credits (gross up) (2,618) (1,177)

Non-deductible expenditure (53) (68)

Other (609) 1,502

(3,280) 257

Tax effect of:




Discount on unrealised losses 3,408 2,381

Pension exemption 1,118 1,229

General operating provision revenue – 2,886

Other – (10)

49,475 57,286

Tax effect of:

Over/(under) provision for prior years (note 6(a)) 914 247

Tax credits 17,455 7,847

18,369 8,094

Income tax expense (32,907) (33,699)


2011 $’000

2010 $’000

Income tax liability payable to the Board 30,440 28,766

Refer to note 4 (c) of the Notes to the Financial Statements of the Scheme.


Opening balance

Charge to operating statement

Closing balance

Capital losses 27,587 (4,213) 23,374

Pension adjustment (3,015) 940 (2,075)

Balance as 30 June 2011 24,572 (3,273) 21,299

Capital losses 32,541 (4,954) 27,587

Pension adjustment (3,233) 218 (3,015)

Balance as 30 June 2010 29,308 (4,736) 24,572



7. OTHER PAYABLES

2011 $’000

2010 $’000

Due within 12 months

Sundry creditor (1) (1)

Co-Contribution payable 265

Pensions payable – 423

264 422

Due to the short term nature of these payables, the carrying value is assumed to approximate their fair value.

8. PROVISION

(a) General operating provision:

The administration expenses of TAS were initially paid by the Scheme of the Fund. To recoup this outlay, the crediting rate of TAS is reduced by a specified rate. This rate is based on a percentage of net assets of TAS which varies between investment choices.

To recoup the income tax expense of TAS, the crediting rate of TAS is reduced by a specified rate. This rate is based upon an estimate of the income tax expense. Movements in provision during the year explained by:

2011 $’000

2010 $’000

Opening balance 14,111 40,766

Add amounts deducted from members 54,546 37,406

Less amounts paid from provision (50,492) (49,346)

Add/(less) amounts transferred from/(to) reserves through operating statement (Note 9)

2,050

(16,700)

Add adjustment relating to prior year – 1,985

Closing balance 20,215 14,111

The difference between the amount deducted from members and the actual administration and income tax expense is disclosed as the General Operating Provision. This surplus is administered on the determination by the Board in accordance with the Trust Deed.

The balance of the provision is made up of the following fee components:

2011 $’000

2010 $’000

Administration 2,772 1,322

Investment management 1,185 588

Income tax 16,258 12,201




(b) Provision for Death and Incapacity insurance:

TAS provides death and disability benefits to members. Premiums are deducted from members’ accounts each fortnight. The Fund is a self insurer

2011 $’000

2010 $’000

Opening balance 15,056 15,322

Add premiums deducted from members 6,374 5,734

Less lump sums paid from provision (1,387) (3,438)

Less pensions paid from provision (2,097) (1,953)

Less administration fee paid from provision (469) (609)


On the basis of the most recent actuarial review at 30 June 2010, the balance of the provision was adequate to meet claims.

9. RESERVES

2011 $’000

2010 $’000

Opening balance 19,239 –

Less/(add) amounts to/(from) operating statement and general operating provision (Note 8)

(2,050)

16,700

Add amounts from operating statement and mortgage default provision – 1,816

Less amounts incurred by the outsourcing project from operating statement (3,486) –

Add bonus income interest from operating statement 1,327 723

Add surplus of TAS assets over liabilities established at the time of rollover to Mercer

23,125

–


The balance of the reserves is made up of the following components:

2011 $’000

2010 $’000

Income – 723

Operating risk 21,741 13,416

Strategic development 16,414 5,100


The operating risk reserve is designed to cover the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events that are relevant for the operations of the Fund’s defined contribution schemes.

The strategic development reserve is designed to fund initiatives to ensure that the Fund is able to continually develop in line with the needs of members.

The income account reserve account is used to allocate investment earnings which have not been applied to the members’ accounts. Funds were transferred to the reserve with approval from the Investment Committee.



10. LIABILITY FOR ACCRUED BENEFITS

Changes in liability for accrued benefits: 2011 $’000

2010 $’000

Liability for Accrued Benefits at the beginning of the year 1,931,150 1,620,819

Plus: Benefits Accrued from Ordinary Activities after Income Tax 597,981 609,304

Less: Benefits Paid (305,918) (298,973)

Liability for Accrued Benefits at end of the year 2,223,213 1,931,150

2011 $’000

2010 $’000

Consists of: Superannuation Guarantee and Investment Account members

1,961,379

1,717,671

Allocated Pension and Term Allocated Pension Accounts 261,834 213,479

Liability for Accrued Benefits at the end of the year 2,223,213 1,931,150

No guarantees have been made in respect of any part of the liability for accrued benefits of the Account.

11. VESTED BENEFITS

Vested benefits are benefits which are not conditional upon continued membership of the Account (or any factor other than resignation from the Account) and include benefits which members were entitled to receive had they terminated their membership as at reporting date.

Vested benefits are benefits that are not conditional upon continued membership of TAS (or any factor other than resignation from TAS) being benefits that members were entitled to receive had they terminated their membership as at the reporting date.

2011 $’000

2010 $’000

Investment Account and Superannuation Guarantee members 1,950,749 1,716,225

Allocated Pension and Term Allocated Pension Accounts 259,614 212,977

Vested benefits at the as at 30 June 2,210,363 1,929,202

No guarantees have been made in respect of any part of the liability for accrued benefits of TAS.




2011 $’000

2010 $’000








112,058 83,958


Interest 33,187 26,506

Dividends 45,222 24,341


Property rentals 2,137 2,545

112,058 83,958


2011 $’000

2010 $’000


Australian equities 6,801 (11,089)

International equities 3,185 (4,373)

Diversified fixed interest 5,687 (6,168)

Property 6,870 (1,784)

Alternative investments 10,040 (2,198)

Cash 632 938

Total unrealised gain/(losses) 33,215 (24,674)





Property (309) 576

Alternative investments 141 –

Cash 60 –

Total realised gains 51,534 90,901





14. OTHER CONTRIBUTIONS

2011 $’000

2010 $’000

Other contributions 4 41

Other contributions are adjustments to the funding of TAS, described in note 3.

15. STATEMENT OF CASH FLOWS

(a) Reconciliation of Net Cash from Operations to Benefits Accrued as a Result of Operations after Income Tax

2011 $’000

2010 $’000

Benefits accrued after income tax 616,897 628,543

Changes in net market value of investments (84,749) (66,227)

Benefits paid (305,918) (298,973)

Non-cash distributions (note 15(c)) (99,402) (58,136)

Change in operating assets and liabilities

Decrease in other receivable – 154

Decrease in interest receivable 138 5,007

Decrease in deferred tax asset 3,273 204

Increase in other payable 12,795 17,405

(Decrease)/increase in contributions payable (683) 394

Decrease in general operating provisions 6,104 (26,655)

(Decrease)/increase in provision for Death and Incapacity insurance 2,421 (266)

Increase in provision for income tax 1,674 3,777

Increase/(decrease) in provision for deferred tax liability 0 4,532

(Decrease)/increase in provision for mortgage 0 (808)

Decrease in superannuation contributions surcharge payable (8) (27)

Net cash inflow form operating activities 152,542 208,924

(b) Reconciliation of cash and cash equivalents:

2011 $’000

2010 $’000

Cash balances comprise:

Cash at bank 9,364 11,133


391,143 392,472


(c) Non cash transactions:

2011 $’000

2010 $’000

Dividends 24,991 21,198

Interest 45,135 17,948


99,402 58,136

The above income transactions were received and reinvested by acquiring additional investment units.


Refer to note 17 of the Notes to the Financial Statements of the Scheme.

17. INSURANCE

TAS provides death and disability benefits to members. The Fund is a self insurer and provides for any liability for benefits through a death and disability provision account. Any deficit or surplus in the account at the end of the financial year is considered by the Board on actuarial advice in accordance with Clause 3.6 of the Tasmanian Accumulation Scheme Trust Deed.













Parliamentary Superannuation Fund Statement of net assets as at 30 June 2011

Note 2011 $’000

2010 $’000

ASSETS

Receivables

Other 3 – 18

(1) 18

Investments



Diversified fixed interest 4 772 730

Property 1,036 937


Cash deposits 194 255

6,245 5,921

TOTAL ASSETS 6,244 5,939

LIABILITIES

Payables

Other 5 81 25

Interfund 1,340 710

1,421 735

Provisions

General operating provision 6 811 641

Tax Liabilities

Provision for income tax 7(c) – 8

Deferred tax liability 7(e) 18 16

Superannuation contributions surcharge payable 4 22

22 46


NET ASSETS AVAILABLE TO PAY BENEFITS 3,990 4,517



Parliamentary Superannuation Fund Statement of changes in net assets for the year ended 30 June 2011

Note 2011 $’000

2010 $’000

INVESTMENT REVENUE

Interest 8 45 41

Dividends 8 106 68

Distributions 8 125 138

Property rentals 8 10 12

Movement in net market values of investments 9 277 254

563 513

Less: direct investment expenses 23 22

Gross profit on investment activities 540 491


Employer contributions 857 969

Member contributions 32 40

889 1,009


BENEFITS PAID

Pensions 1,212 1,298

Lump sums 548 –

Refunds & interest 8 –

1,768 1,298

EXPENSES

General operating fee – administration component 56 54

General operating fee – taxation component charge 136 155

Superannuation contributions surcharge 2(m) (3) 3


NET CHANGE FOR THE YEAR BEFORE INCOME TAX (528) (10)

INCOME TAX BENEFIT/(EXPENSE) 7(a) 1 (15)

NET CHANGE IN NET ASSETS AFTER INCOME TAX (527) (25)


4,517

4,542


3,990

4,517




The Parliamentary Superannuation Fund (PSF) is a defined benefit scheme, domiciled in Australia that provides benefits to its members pursuant to the provisions of the Retirement Benefits Act 1993. The PSF was closed to new members as at 11 November 1985.

The address of PSF’s registered office is 39 Sandy Bay Road, Hobart, Tasmania, 7000.

The Trustee of PSF is the Retirement Benefits Fund Board (ABN 97 724 593 931).



The financial report is a general purpose report which has been prepared in accordance with Australian Accounting Standard AAS 25 ‘Financial Reporting by Superannuation Plans’ (AAS 25) as amended by AASB 2005-13 ‘Amendments to Australian Accounting Standards (AAS 25)’, other applicable accounting standards, other mandatory requirements, the provisions of the Retirement Benefits Act 1993, the Tasmanian Accumulation Scheme Trust Deed, and relevant legislative requirements.

The Retirement Benefits (Parliamentary Superannuation Trustee Arrangements and Miscellaneous Amendments) Act 2002 received Royal Assent on 27 November 2002. This legislation had effect from 1 January 2003. It resulted in:

The PSF and the Parliamentary Retiring Benefits Fund being transferred to the Fund as sub-funds

The Board becoming the corporate Trustee of these sub funds

The Parliamentary Superannuation Act 1973, the Parliamentary Retiring Benefits Act 1985, the Parliamentary Superannuation Regulations 1999 and the Parliamentary Retiring Benefits Regulations 1999 being repealed.

The Retirement Benefits (Parliamentary Superannuation) Regulations 2002 commenced on 1 January 2003. The purpose of these regulations is to ensure that equivalent rights continue to be provided to members of the Parliamentary Funds upon their incorporation as sub-funds of the Fund.

The financial statements were approved by the Board of Trustee, Retirement Benefits Fund Board on 5 October 2011.











Parliamentary Superannuation Fund Notes to the financial statements for the year ended 30 June 2011 (continued)


(d) Investments



Refer to note 2(e) of the Notes to the Financial Statements of the Scheme.




The liability for accrued benefits of PSF at 30 June 2011 is not included in the statement of net assets, the amount being reported by way of note (note 10).

The amount of accrued benefits has been determined on the basis of the present value of expected future payments which arise from membership of PSF, to the measurement date. The figure reported in note 9 has been determined by reference to expected future salary levels and by application of a market-based, risk-adjusted discount rate and relevant actuarial assumptions.

A copy of a statement prepared by the Fund Actuary, Calculation of Vested and Accrued Benefits in accordance with AAS 25 for the Retirement Benefits Fund as at 30 June 2011 is appended to the financial statements (Appendix C).





(j) Income tax





Refer to note 2(n) of the Notes to the Financial Statements of the Scheme.



(n) Benefits payable

Refer to note 2(q) of the Notes to the Financial Statements of the Scheme.

(o) Provisions


(p) Comparatives




3. OTHER RECEIVABLES

2011 $’000

2010 $’000

Recoverable within 12 months Insurance prepayments

–

18

Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value

4. INVESTMENTS


2011 $’000

2010 $’000

Other diversified fixed interest 532 438

Mortgages 240 292

Total diversified fixed interest investments 772 730





To comply with accounting standards regarding the recognition of provisions, the Board approved the transfer of the mortgage default provision to the operating risk reserve as at 30 June 2010.

5. OTHER PAYABLES

2011 $’000

2010 $’000

Due within 12 months Pensions payable

81

25

Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.

6. GENERAL OPERATING PROVISION

The administration expenses of PSF were initially paid by the Scheme of the Fund. To recoup this outlay, the crediting rate of PSF is reduced by a specified rate. This rate is based on a percentage of net assets of PSF which varies between investment choices.

To recoup the income tax expense of PSF, the crediting rate of PSF is reduced by a specified rate. This rate is based upon an estimate of the income tax expense. Movements in provision during the year explained by:

2011 $’000

2010 $’000

Opening balance 641 468

Add amounts deducted from members 210 242

Less amounts paid from provision (40) (69)

Closing balance 811 641





2011 $’000

2010 $’000

Administration 90 55

Investment management 48 49

Income taxation 673 537


7. INCOME TAX

As the Fund is an exempt public sector superannuation scheme, it is deemed to be a complying superannuation fund for tax purposes. Accordingly, PSF is taxed at the rate of 15% on net investment earnings, employer contributions and capital gains, with deductions allowable for administration expenses, but not benefits paid. A reconciliation of income tax expense, with revenues and expenses for the year before income tax is shown below.


2011 $’000

2010 $’000

Current tax (expense)/benefit – (8)

Deferred tax benefit (3) (1)

Over/(under) provisions prior years - current tax 3 (2)

Over/(under) provisions prior years - deferred tax 1 (4)

1 (15)


2011 $’000

2010 $’000

Prima facie tax benefit on change in net assets before income tax at 15%

79

1

Tax effect of:

Tax credits (gross up) (7) (4)

Benefits paid (265) (195)

Other (20) (19)

(292) (218)

Tax effect of:


Untaxed contributions 129 145


Discount on realised losses (1) -

Discount on unrealised losses 12 5

Pension exemption 19 25

162 183

Tax effect of:

Over/(under) provision for prior years (note 7 (a)) 4 (6)

Tax credits 48 25

52 19

Income tax benefit/(expense) 1 (15)




2011 $’000

2010 $’000

Income tax liability – 8


Opening balance

Charge to statement


Closing balance

Investment income – – –

Pensions – – –

Balance as 30 June 2011 – – –

Investment income 1 (1) –

Pensions (1) 1 –

Balance as 30 June 2010 – – –

(e) Deferred tax liability:

Opening balance

Charge to statement of change

in net assets

Closing balance

Capital losses (71) 20 (51)

Pension adjustment 87 (18) 69

Balance as 30 June 2011 16 2 18

Capital losses (71) 0 (71)

Pension adjustment 82 5 87

Balance as 30 June 2010 11 5 16




2011 $’000

2010 $’000


Australian equities 103 61

International equities 26 18

Diversified fixed interest 41 52

Property 37 36

Alternative investments 63 68

Cash deposits 16 24

286 259


Interest 45 41

Dividends 106 68

Distribution 125 138

Property rentals 10 12

286 259


2011 $’000

2010 $’000


Australian equities 22 (11)


Diversified fixed interest 22 (17)

Property 32 (10)

Alternative investments 46 (12)

Cash 2 9

Total unrealised gains/(losses) 153 (18)





Property (1) 3

Total realised gains 124 272

Total change in net market value of investments 277 254



10. TOTAL ACCRUED BENEFITS FOR THE PSF

The liability for accrued benefits represents PSF’s present obligation to pay benefits to members and beneficiaries and has been determined on the basis of the present value of expected future payments which arise from the membership of the plan up to the reporting date.


2011 $’000

2010 $’000

Accrued Benefits as at 30 June 16,245 18,683

In accordance with policy note 2(g) these accrued benefits are not recognised in these financial statements.

11. TOTAL VESTED BENEFITS FOR THE PSF

Vested benefits are benefits which are not conditional upon continued membership of PSF (or any factor other than resignation from PSF) and include benefits which members were entitled to receive had they terminated their membership as at the reporting date.

2011 $’000

2010 $’000

Vested Benefits as at 30 June 16,478 19,245


The vested benefits referred to in note 11 are guaranteed by the Treasurer under the Retirement Benefits (Parliamentary Superannuation) Regulations 2002 (‘the Regulations’).


Employer contributions to the PSF are unfunded, being made on an ‘emerging cost’ basis. Employee contributions, which are fully funded by the members and vest fully in them, are made at a specified rate of salary. This is reflected in the difference between the net assets available to pay benefits and the amount of accrued benefits as at the reporting date.

2011 $’000

2010 $’000

2009 $’000

2008 $’000

Accrued benefits 16,245 18,683 17,843 17,950


3,990

4,517

4,542

5,791

Unfunded liability 12,255 14,166 13,301 12,159




14. INSURANCE

The Fund provides death and disability benefits to members. The Fund is a self insurer and is liable for benefits payable. There was one active member of the fund at 30 June 2011.


Refer to note 21 of the notes to the Financial Statements of the Scheme.






Refer to note 25 of the notes to the Financial Statements of the Scheme.







Parliamentary Retiring Benefits Fund Statement of net assets as at 30 June 2011

Note 2011 $’000

2010 $’000

ASSETS

Cash Assets

Cash at bank 2(e) 15 –

Receivables

Other 3 – 19

– 19

Investments


International equities 1,100 906

Diversified fixed interest 4 597 520

Property 795 649



4,798 4,201

Other Assets

Deferred tax asset 5(d) 125 140


LIABILITIES

Payables

Interfund 859 974

Provisions


Tax Liabilities

Provision for income tax 5(c) 30 118

Superannuation contributions surcharge payable 143 207

173 325





Note 2011 $’000

2010 $’000

INVESTMENT REVENUE

Interest 7 34 46

Dividends 7 80 76



Movement in net market values of investments 8 207 417

423 694


Gross profit on investment activities 406 669


Employer contributions 190 294


278 407

TOTAL REVENUE 684 1,076

BENEFITS PAID

Lump sums – 3,455

EXPENSES


General operating fee – taxation component (credit)/charge 5 (10)

Insurance 7 (20)

Superannuation contributions surcharge 2(m) (228) –

TOTAL EXPENSES (174) 3,487

NET CHANGE FOR THE YEAR BEFORE INCOME TAX 858 (2,411)

INCOME TAX EXPENSE 5(a) (40) (86)

NET CHANGE IN NET ASSETS AFTER INCOME TAX 818 (2,497)


2,551

5,048


3,369

2,551


Parliamentary Retiring Benefits Fund Statement of changes in net assets for the year ended 30 June 2011



The Parliamentary Retiring Benefits Fund (PRBF) is a defined benefit scheme, domiciled in Australia that provides benefits to its members pursuant to the provisions of the Retirement Benefits Act 1993. The PRBF was closed to new members as at 1 July 1999.

The address of PRBF’s registered office is 39 Sandy Bay Road, Hobart, Tasmania, 7000.

The Trustee of PRBF is the Retirement Benefits Fund Board (ABN 97 724 593 931).



The financial report is a general purpose report which has been prepared in accordance with Australian Accounting Standard AAS 25 ‘Financial Reporting by Superannuation Plans’ (AAS 25) as amended by AASB 2005-13 ‘Amendments to Australian Accounting Standards (AAS 25)’, other applicable accounting standards, other mandatory requirements, the provisions of the Retirement Benefits Act 1993, the Tasmanian Accumulation Scheme Trust Deed, and relevant legislative requirements.

The Retirement Benefits (Parliamentary Superannuation Trustee Arrangements and Miscellaneous Amendments) Act 2002 received Royal Assent on 27 November 2002. This legislation had effect from 1 January 2003. It resulted in:

The PSF and the PRBF being transferred to the Fund as sub-funds

The Board becoming the corporate Trustee of these sub funds

The Parliamentary Superannuation Act 1973, the Parliamentary Retiring Benefits Act 1985, the Parliamentary Superannuation Regulations 1999 and the Parliamentary Retiring Benefits Regulations 1999 being repealed.

The Retirement Benefits (Parliamentary Superannuation) Regulations 2002 commenced on 1 January 2003. The purpose of these regulations is to ensure that equivalent rights continue to be provided to members of the Parliamentary Funds upon their incorporation as sub-funds of the Fund.






Refer to note 2(c) of the Notes to the Financial Statements of the PSF.

(d) Investments







The liability for accrued benefits of PRBF at 30 June 2011 is not included in the statement of net assets, the amount being reported by way of note (note 9).

The amount of accrued benefits has been determined on the basis of the present value of expected future payments which arise from membership of PRBF, to the measurement date. The figure reported in note 9 has been determined by reference to expected future salary levels and by application of a market-based, risk-adjusted discount rate and relevant actuarial assumptions.


Parliamentary Retiring Benefits Fund Notes to the financial statements for the year ended 30 June 2011 (continued)






(j) Income tax










(o) Provisions


(p) Comparatives


3. OTHER RECEIVABLES

2011 $’000

2010 $’000

Recoverable within 12 months Insurance prepayments

–

19

Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value.

4. INVESTMENTS


2011 $’000

2010 $’000

Other diversified fixed interest 408 312

Mortgages 189 208

Total diversified fixed interest investments 597 520

Default provision rate applied to mortgage investments –








5. INCOME TAX

As the Fund is an exempt public sector superannuation scheme, it is deemed to be a complying superannuation fund for tax purposes. Accordingly, PRBF is taxed at the rate of 15% on net investment earnings, employer contributions and capital gains, with deductions allowable for administration expenses, but not benefits paid. A reconciliation of income tax expense, with revenues and expenses for the year before income tax is shown below.


2011 $’000

2010 $’000

Current tax (expense)/benefit (30) (118)

Deferred tax benefit (15) 26

Over/(under) provisions prior years – current tax 5 1

Over/(under) provisions prior years – deferred tax – 5

(40) (86)


2011 $’000

2010 $’000

Prima facie tax (expense)/benefit on change in net assets before income tax at 15%

(129)

362

Tax effect of:


Benefits paid – (518)

Other (1) 1

(6) (522)

Tax effect of:



Discount on realised (losses)/gains (1) -

Discount on unrealised losses 44 13

55 33

Tax effect of:


Tax credits 35 36

40 41

Income tax (expense) (40) (86)




2011 $’000

2010 $’000

Income tax liability 30 118


Opening balance

Charge to statement


Closing balance

Capital losses 140 (15) 125

Balance as 30 June 2011 140 (15) 125

Capital losses 109 31 140

Balance as 30 June 2010 109 31 140


The administration expenses of PRBF were initially paid by the Scheme of the Fund. To recoup this outlay, the crediting rate of PRBF is reduced by a specified rate. This rate is based on a percentage of net assets of PRBF which varies between investment choices.

To recoup the income tax expense of PRBF, the crediting rate of PRBF is reduced by a specified rate. This rate is based upon an estimate of the income tax expense. Movements in provision during the year explained by:

2011 $’000

2010 $’000







2011 $’000

2010 $’000

Administration 83 61







2011 $’000

2010 $’000





Property 28 39


Cash deposits 12 28

216 277


Interest 34 46

Dividends 80 76

Distributions 95 141


216 277

8. MOVEMENTS IN NET MARKET VALUE OF INVESTMENT ASSETS

2011 $’000

2010 $’000





Property 24 (14)


Cash 2 10

Total unrealised gains 114 107





Property (1) 3

Total realised gains 93 310

Total change in net market value of investments 207 417



9. TOTAL ACCRUED BENEFITS FOR THE PRBF

The liability for accrued benefits represents PRBF’s present obligation to pay benefits to members and beneficiaries and has been determined on the basis of the present value of expected future payments which arise from the membership of the plan up to the reporting date.


2011 $’000

2010 $’000



10. TOTAL VESTED BENEFITS FOR THE PRBF

Vested benefits are benefits which are not conditional upon continued membership of PRBF (or any factor other than resignation from PRBF) and include benefits which members were entitled to receive had they terminated their membership as at the reporting date.

2011 $’000

2010 $’000



The vested benefits referred to in note 10 are guaranteed by the Treasurer under the Retirement Benefits (Parliamentary Superannuation) Regulations 2002 (‘the Regulations’).


The PRBF was established to apply to all those members who were elected to the Tasmanian Parliament for the first time after 12 November 1985. The PRBF was closed to new members on 1 July 1999. The PRBF is lump sum based, with any entitlement not being able to be converted to or paid in the form of a pension, other than an Allocated Pension.

The financial position of the PRBF has deteriorated during the period from the most recent actuarial investigation as at 30 June 2007 to 30 June 2010. This deterioration was primarily caused by the decline in asset values during the period and is expected to increase the required level of employer contributions for the PRBF. A review of the recommended employer contributions will be undertaken as part of the actuarial investigation due at 30 June 2010.

2011 $’000

2010 $’000

2009 $’000

2008 $’000

Accrued benefits 4,595 4,078 7,007 8,019


3,369

2,551

5,048

7,512

Unfunded liability 1,226 1,527 1,959 507


13. INSURANCE

The scheme has a Group life cover. The insurer will pay a benefit under the policy to PRBF (policy owner) on the event of a death or invalidity benefit being paid to a member of the PRBF. The maximum benefit paid under this cover is $400,000 (2010: $400,000). The Fund is self insured for the death or invalidity benefit in excess of this amount. There are seven active members of the fund at 30 June 2011.



State Fire Commission Superannuation Scheme Statement of net assets as at 30 June 2011

Note 2011 $’000

2010 $’000

ASSETS

Cash Assets


Receivables

Investment income accrued 3(a) 11 13

Other 3(b) 132 –

143 13

Investments






Cash deposits 872 1,109

28,124 25,647

Other Assets



LIABILITIES

Payables

Interfund 8,803 7,704

Provisions


Tax Liabilities

Provision for income tax 5(c) 190 1,149





State Fire Commission Superannuation Scheme Statement of changes in net assets for the year ended 30 June 2011

Note 2011 $’000

2010 $’000

INVESTMENT REVENUE

Interest 7 205 274

Dividends 7 478 434




2,557 4,943


Gross profit on investment activities 2,452 4,799




1,405 2,133


BENEFITS PAID

Lump sums 322 37,542

EXPENSES



Insurance 143 206

798 585


NET CHANGE FOR THE YEAR BEFORE INCOME TAX 2,737 (31,195)


NET CHANGE IN NET ASSETS AFTER INCOME TAX 2,485 (31,909)


18,442

50,351


20,927

18,442




The State Fire Commission Superannuation Scheme (SFCSS) is a defined benefit scheme, domiciled in Australia that provides benefits to its members pursuant to the provisions of the Retirement Benefits (State Fire Commission Superannuation Scheme) Act 2005. The SFCSS was closed to new members on 1 May 2006. The scheme is operated for the purpose of providing for employees (and their dependants of beneficiaries) of the Tasmania Fire Service lump sum or pension benefits upon retirement, termination of service, death or disablement.

The address of SFCSS’s registered office is 39 Sandy Bay Road, Hobart, Tasmania, 7000.

The Trustee of SFCSS is the Retirement Benefits Fund Board (ABN 97 724 593 931).



The financial report is a general purpose report which has been prepared in accordance with Australian Accounting Standard AAS 25 ‘Financial Reporting by Superannuation Plans’ (AAS 25) as amended by AASB 2005-13 ‘Amendments to Australian Accounting Standards (AAS 25)’, other applicable accounting standards, other mandatory requirements, the provisions of the Retirement Benefits (State Fire Commission Superannuation Scheme) Act 2005, the State Fire Commission Superannuation Trust Deed, and relevant legislative requirements.

The Retirement Benefits (State Fire Commission Superannuation Scheme) Act 2005 received Royal Assent on 24 June 2006. This legislation had effect from 1 May 2006. It resulted in:

The SFCSS being transferred to the Fund as a sub-fund

The Board becoming the corporate Trustee of this sub-fund

The State Fire Commission Superannuation Scheme Act 1994 being repealed.

The purpose of the Retirement Benefits (State Fire Commission Superannuation Scheme) Act 2005 (the ‘Act’) is to ensure that equivalent rights continue to be provided to members of the SFCSS upon their incorporation as a sub-fund of the Fund.











All amounts are presented in thousands of Australian Dollars unless otherwise stated

State Fire Commission Superannuation Scheme Notes to the financial statements for the year ended 30 June 2011


(d) Investments







The liability for accrued benefits of SFCSS at 30 June 2011 is not included in the statement of net assets, the amount being reported by way of note (note 9).

The amount of accrued benefits has been determined on the basis of the present value of expected future payments which arise from membership of SFCSS, to the measurement date. The figure reported in Note 9 has been determined by reference to expected future salary levels and by application of a market-based, risk-adjusted discount rate and relevant actuarial assumptions.






(j) Income tax










(o) Provisions


(p) Comparatives


State Fire Commission Superannuation Scheme Notes to the financial statements for the year ended 30 June 2011 (continued)


3. RECEIVABLES

(a) Investment income accrued:

2011 $’000

2010 $’000



(b) Other receivables:

2011 $’000

2010 $’000

Recoverable within 12 months Prepayments

132

–


4. INVESTMENTS


2011 $’000

2010 $’000


Mortgages 1,085 1,257







5. INCOME TAX

As the Fund is an exempt public sector superannuation scheme, it is deemed to be a complying superannuation fund for tax purposes. Accordingly, the SFCSS is taxed at the rate of 15% on net investment earnings, employer contributions and capital gains, with deductions allowable for administration expenses, but not benefits paid. A reconciliation of income tax expense, with revenues and expenses for the year before income tax is shown below.


2011 $’000

2010 $’000

Current tax (expense)/benefit (190) (1,151)

Deferred tax benefit (92) 398

Over/(under) provisions prior years – current tax 36 –

Over/(under) provisions prior years – deferred tax (6) 39

(252) (714)




2011 $’000

2010 $’000

Prima facie tax (expense)/benefit on change in net assets before income tax at 15%

(410)

4,679

Tax effect of:



Benefits paid (48) (5,631)

Other (7) 20

(83) (5,648)

Tax effect of:



Discount on realised losses (6) –

Discount on unrealised losses 34 (58)

32 (20)

Tax effect of:


Tax credits 179 236

209 275

Income tax (expense)/benefit (252) (714)


2011 $’000

2010 $’000

Income tax liability 190 1,149


Opening balance

Charge to statement of

change in net assets

Closing balance

Capital losses 2,063 (98) 1,965

Balance as 30 June 2011 2,063 (98) 1,965

Capital losses 1,626 437 2,063

Balance as 30 June 2010 1,626 437 2,063




The administration expenses of SFCSS were initially paid by the Scheme of the Fund. To recoup this outlay, the crediting rate of SFCSS is reduced by a specified rate. This rate is based on a percentage of net assets of SFCSS which varies between investment choices.

To recoup the income tax expense of SFCSS, the crediting rate of the SFCSS is reduced by a specified rate. This rate is based upon an estimate of the income tax expense. Movements in provision during the year explained by:

2011 $’000

2010 $’000


Add amounts deducted from members 997 1,206

Less amounts paid from provision (893) (1,401)




2011 $’000

2010 $’000

Administration 26 (35)





2011 $’000

2010 $’000





Property 167 224



1,292 1,577


Interest 205 274

Dividends 478 434



1,292 1,577




2011 $’000

2010 $’000


Australian equities 94 1,224



Property 141 (85)


Cash 9 52

Total unrealised gains 704 1,620





Property (6) 14

Cash 1 –

Total realised gains 561 1,746


9. TOTAL ACCRUED BENEFITS FOR THE SFCSS AS A WHOLE

The liability for accrued benefits represents SFCSS’s present obligation to pay benefits to members and beneficiaries and has been determined on the basis of the present value of expected future payments which arise from the membership of the Fund up to the reporting date.

The figure reported has been determined by reference to the expected future salary levels and by application of a market-based, risk-adjusted discount rate and relevant actuarial assumptions.

The Accrued Benefits were last valued at 30 June 2009 and that measurement is disclosed as follows:

30 June 2009 $’000

31 March 2009 $’000



10. TOTAL VESTED BENEFITS FOR THE SFCSS AS A WHOLE

Vested benefits are benefits which are not conditional upon continued membership of the SFCSS (or any factor other than resignation from the SFCSS) and include benefits which members were entitled to receive had they terminated their membership as at the reporting date.

The Vested Benefits were last valued at 31 March 2010 and that measurement is disclosed as follows:

2010 $’000

2009 $’000





The vested benefits referred to in note 10 are guaranteed by the Minister administering the Fire Service Act 1979 under Section 8 of the Retirement Benefit (State Fire Commission Superannuation Scheme) Act 2005.


The SFCSS was fully funded for accrued benefits at the time of the last actuarial triennial review at 30 June 2009. Following a significant number of exits from the scheme in November 2009 an updated actuarial review at 31 March 2010 disclosed that assets did not cover accrued benefits.

2010 $’000

2009 $’000

Accrued Benefits 20,100 49,181

Net assets available to pay benefits 18,442 50,351

Unfunded Liability 1,658 (1,170)

In order to restore benefits coverage to 100% by 30 June 2012, it was recommended that employer contributions be set at:

11% of salaries; plus

10% of any benefit paid to exiting members (excluding the insured portion of any death or disablement benefits); plus

any deemed member contributions.

The rates will be reviewed at the next triennial investigation due no later than 1 May 2012.

13. INSURANCE

The Fund provides death and disability benefits to members. The Trustee has taken out insurance to cover the part of the benefit in excess of the vested benefit.















Note 2011 $’000

2010 $’000

ASSETS

Cash Assets


Receivables

Investment income accrued 3(a) 4 7

Other 3(b) – 112

4 119

Investments





Alternative Investments 7,743 7,502


40,463 36,416

Other Assets

Deferred tax asset 5(d) 735 862


LIABILITIES

Payables

Interfund 3,549 3,585

Provisions


Tax Liabilities

Provision for income tax 5(c) 323 504




Tasmanian Ambulance Service Superannuation Scheme Statement of net assets as at 30 June 2011


Note 2011 $’000

2010 $’000

INVESTMENT REVENUE

Interest 7 292 242

Dividends 7 682 403




3,626 2,898


Gross profit on investment activities 3,477 2,775




2,537 2,268


BENEFITS PAID

Lump sums 740 1,083

EXPENSES



Insurance 98 1

830 94


NET CHANGE FOR THE YEAR BEFORE INCOME TAX 4,876 3,866


NET CHANGE IN NET ASSETS AFTER INCOME TAX 4,444 3,326


33,021

29,695


37,465

33,021

The above Statement of Changes in Net Assets should be read in conjunction with the accompanying notes.

Tasmanian Ambulance Service Superannuation Scheme Statement of changes in net assets as at 30 June 2011



The Tasmanian Ambulance Service Superannuation Scheme (TASSS) is a defined benefit scheme, domiciled in Australia that provides benefits to its members pursuant to the provisions of the Retirement Benefits (Tasmanian Ambulance Service Superannuation Scheme) Act 2006. The TASSS was closed to new members on 30 June 2006. Benefits of members are calculated by way of formula as defined in the Tasmanian Ambulance Service Superannuation Trust Deed.

The address of TASSS’s registered office is 39 Sandy Bay Road, Hobart, Tasmania, 7000.

The Trustee of TASSS is the Retirement Benefits Fund Board (ABN 97 724 593 931).



The financial report is a general purpose report which has been prepared in accordance with Australian Accounting Standard AAS 25 ‘Financial Reporting by Superannuation Plans’ (AAS 25) as amended by AASB 2005-13 ‘Amendments to Australian Accounting Standards (AAS 25)’, other applicable accounting standards, other mandatory requirements, the provisions of the Retirement Benefits (Tasmanian Ambulance Service Superannuation Scheme) Act 2006, the Tasmanian Ambulance Service Superannuation Trust Deed, and relevant legislative requirements.

The Retirement Benefits (Tasmanian Ambulance Service Superannuation Scheme) Act 2006 received Royal Assent on 26 June 2006. This legislation had effect from 1 May 2006. It resulted in:

The TASSS being transferred to the Fund as a sub-fund

The Board becoming the corporate Trustee of this sub-fund

The Ambulance Service Act 1982 and Public Sector Superannuation Reform Act 1999 being amended.

The purpose of the Retirement Benefits (Tasmanian Ambulance Service Superannuation Scheme) Act 2006 (the ‘Act’) is to ensure that equivalent rights continue to be provided to members of the TASSS upon their incorporation as a sub-fund of the Fund.






Refer to note 2(c) of the Notes to the Financial Statements of the SFCSS.

(d) Investments







The liability for accrued benefits of TASSS at 30 June 2011 is not included in the statement of net assets, the amount being reported by way of note (note 9).

Tasmanian Ambulance Service Superannuation Scheme Notes to the financial statements for the year ended 30 June 2011


The amount of accrued benefits has been determined on the basis of the present value of expected future payments which arise from membership of TASSS, to the measurement date. The figure reported in note 9 has been determined by reference to expected future salary levels and by application of a market-based, risk-adjusted discount rate and relevant actuarial assumptions.






(j) Income tax










(o) Provisions


(p) Comparatives


3. RECEIVABLES

(a) Investment income accrued:

2011 $’000

2010 $’000



(b) Other receivables:

2011 $’000

2010 $’000

Recoverable within 12 months Prepayments

–

112


Tasmanian Ambulance Service Superannuation Scheme Notes to the financial statements for the year ended 30 June 2011 (continued)


4. INVESTMENTS


2011 $’000

2010 $’000


Mortgages 1,565 1,778


Default provision rate applied to mortgage investments –


Additional provisions – (22)



5. INCOME TAX

As the Fund is an exempt public sector superannuation scheme, it is deemed to be a complying superannuation fund for tax purposes. Accordingly, the TASSS is taxed at the rate of 15% on net investment earnings, employer contributions and capital gains, with deductions allowable for administration expenses, but not benefits paid. A reconciliation of income tax expense, with revenues and expenses for the year before income tax is shown below.


2011 $’000

2010 $’000

Current tax (expense)/benefit (323) (503)

Deferred tax benefit (128) (60)

Over/(under) provisions prior years – current tax 18 –

Over/(under) provisions prior years – deferred tax 1 23

(432) (540)




2011 $’000

2010 $’000

Prima facie tax expense on change in net assets before income tax at 15%

(731)

(580)

Tax effect of:



Benefits paid (111) (163)

Other (8) 15

(167) (172)

Tax effect of:




Discount on unrealised losses 56 (37)

Surcharge 34 –

132 39

Tax effect of:


Tax credits 315 150

334 173

Income tax expense (432) (540)


2011 $’000

2010 $’000

Income tax liability 323 504


Opening balance

Charge to statement of change

in net assets

Closing balance


Balance as 30 June 2011 862 (127) 735


Balance as 30 June 2010 899 (37) 862




The administration expenses of TASSS were initially paid by the Scheme of the Fund. To recoup this outlay, the crediting rate of TASSS is reduced by a specified rate. This rate is based on a percentage of net assets of TASSS which varies between investment choices.

To recoup the income tax expense of TASSS, the crediting rate of the TASSS is reduced by a specified rate. This rate is based upon an estimate of the income tax expense. Movements in provision during the year explained by:

2011 $’000

2010 $’000







2011 $’000

2010 $’000

Administration (19) (31)





2011 $’000

2010 $’000





Property 238 215



1,842 1,538


Interest 292 242

Dividends 682 403



1,842 1,538




2011 $’000

2010 $’000


Australian equities 126 (159)



Property 202 (56)


Cash 13 52

Total unrealised gains/(losses) 990 (240)





Property (9) 17

Cash 1 –

Total realised gains 794 1,600


9. TOTAL ACCRUED BENEFITS FOR THE TASSS AS A WHOLE

The liability for accrued benefits represents TASSS’s present obligation to pay benefits to members and beneficiaries and has been determined on the basis of the present value of expected future payments which arise from the membership of the Fund up to the reporting date.

The figure reported has been determined by reference to the expected future salary levels and by application of a market-based, risk-adjusted discount rate and relevant actuarial assumptions.

The Accrued Benefits were last valued at 30 June 2009 and that measurement is disclosed as follows:

30 June 2009 $’000

31 March 2009 $’000



10. TOTAL VESTED BENEFITS FOR THE TASSS AS A WHOLE

Vested benefits are benefits which are not conditional upon continued membership of the TASSS (or any factor other than resignation from the TASSS) and include benefits which members were entitled to receive had they terminated their membership as at the reporting date.

The Vested Benefits were last valued at 30 June 2010 and that measurement is disclosed as follows:

2010 $’000

2009 $’000





The vested benefits referred to in note 10 are guaranteed by the Minister administering the Ambulance Services Act 1982 under Section 8 of the Retirement Benefit (Tasmanian Ambulance Service Superannuation Scheme) Act 2005.


The TASSS was fully funded for accrued benefits at the time of the last triennial actuarial review as at 30 June 2009. It was recommended in the review that employer contributions be maintained at 11.9% of salaries.

13. INSURANCE

The Fund provides death and disability benefits to members. The Board has taken out insurance to cover the part of the benefit in excess of the vested benefit.















Appendix A Additional financial instruments disclosures

Overview

The Fund’s assets principally consist of financial instruments which comprise Australian equities, international equities, diversified fixed interest, property, alternative investments (infrastructure, absolute return/hedge fund and private equity investments in listed/unlisted investment vehicles) and cash.

The Board has overall responsibility for the establishment and oversight of the Fund’s risk management framework. The risk management framework is documented in the Fund’s Risk Management Strategy.

The Board’s Risk and Audit Committee (RAC) oversees the Fund’s Risk Management Strategy and is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and additional projects that consider key processes and controls in place to manage the Board’s key risk areas, which are reported to the RAC.

The Board’s Investment Committee (IC) has engaged JANA Investment Advisers Pty Ltd (JANA) as an independent asset consultant to advise on the allocation of assets between the various types of investments described above and the investment strategy of the Fund. This includes the allocation of investments to fund managers, evaluating their performance and providing recommendations to the Board which has ultimate responsibility for the appointment of fund managers. JANA, along with the managers, provides regular monthly and quarterly reports in relation to performance and compliance with investment mandates.

The Fund’s investment activities and use of financial investments expose it to market, currency, interest rate, credit and liquidity risk. The Fund’s exposure to and its objectives, policies and processes for measuring and managing each of these risks is set out in this appendix.

The Fund’s investments are managed:

Internally – Tasmanian property and first mortgage loans on Tasmanian property (approximately 5% of the Fund as at 30 June 2011 [6% in 2010]); and

Externally – all other investments.

All managers are required to invest in accordance with an agreed investment mandate containing guidelines that outline how the investment is to be managed (including how to minimise exposures and risks), measured and reported.

The Board also receives reports from internal management with respect to Fund managers, the Board’s investments and the performance of the Fund as a whole.

The Board, through its IC, JANA and the internal investment management team, ensures that appropriate due diligence is carried out on managers before their appointment and that rigorous monitoring of their performance and compliance continues thereafter.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk would include: currency risk, interest rate risk and other price risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, whilst optimising the return on risk.

To manage market risk, the Board undertakes due diligence of Fund managers prior to their appointment, conducts investment performance and benchmarking and continually monitors market conditions. JANA assists in this analysis and advises the Board in respect of the overall market risk of each of the various portfolios of the Fund.

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign currency exchange rates.

The Fund is exposed to currency risk on financial instruments that are denominated in a currency other than the Australian Dollar. As at 30 June 2011 the Fund held 9 investments (2010: 9) which were primarily denominated in foreign currency.

Consequently, the Fund is exposed to risks that the exchange rate may change in a manner that has an adverse affect on the value of that portion of the Fund’s investments denominated in currencies other than the Australian Dollar.


Appendix A Additional financial instruments disclosures (continued)

The Board may invest in financial instruments and enter into transactions denominated in currencies other than the Australian Dollar within the conditions of the investment strategy. The Board’s strategy for management of currency risk is driven by it’s investment objective and strategy. The Board’s investment strategy allows a net exposure to foreign currencies of 60% of the Fund’s international equity exposure. This equates to approximately 15% exposure of total accumulation scheme funds and 9% of total defined benefit scheme funds.

The Fund’s currency risk is managed back to 83% of international equity (2010: 60% of international equity) exposure target through a currency hedge implemented on a rolling quarterly basis in accordance with the investment strategy.

Specific instruments

Investment managers may use derivatives where the Board deems this appropriate and where it is documented in the contract with individual managers. The investment managers provide the Board with detailed Risk Management Statements which outline their approach to derivatives and confirm their approach is applicable to the investments they manage.

The Board monitors investment managers to confirm that the use of derivatives accords with the overall investment strategy of the Fund and is consistent with the performance objectives of each portfolio and sub fund.

The Board may, when it deems it appropriate, use its custodian to enter into forward exchange contracts to reduce or remove any foreign currency exposure which are not already hedged by its international investment managers.

The Fund’s total net exposure to fluctuations in foreign currency exchange rates at the balance date was as follows:

2011 Net Market Value

AUD A$’000

USD A$’000

JPY A$’000

EUR A$’000

GBP A$’000

Other A$’000

Total A$’000

Assets

Cash and cash equivalents 399,417 10,668 2 331 602 287 411,307

Deposits held with brokers 521 – – – – – 521

Receivables 31,206 1,290 – 318 475 3,312 36,601

Financial assets held at fair value through profit or loss

2,689,797 399,267 35,419 85,608 84,061 146,288 3,440,440

Total assets 3,120,941 411,225 35,421 86,257 85,138 149,887 3,888,869

Liabilities

Payables 2,969 7,725 – 47 232 1,773 12,746

Total liabilities 2,969 7,725 – 47 232 1,773 12,746

Net assets 3,117,972 403,500 35,421 86,210 84,906 148,114 3,876,123

2010 Net Market Value

AUD A$’000

USD A$’000

JPY A$’000

EUR A$’000

GBP A$’000

Other A$’000

Total A$’000

Assets

Cash and cash equivalents 386,156 12,820 513 165 232 1,140 401,026

Deposits held with brokers 1,364 42 16 19 17 – 1,458

Receivables 13,045 2,643 56 1,206 726 1,784 19,460

Financial assets held at fair value through profit or loss

2,453,677 321,392 32,192 78,462 82,933 117,559 3,086,215

Total assets 2,854,242 336,897 32,777 79,852 83,908 120,483 3,508,159

Liabilities

Payables 3,762 12,333 2,873 1,408 1,022 1,495 22,893

Total liabilities 3,762 12,333 2,873 1,408 1,022 1,495 22,893

Net assets 2,850,480 324,564 29,904 78,444 82,886 118,988 3,485,266


Sensitivity analysis – currency

The majority of the Fund’s unhedged currency exposure is contained within the International Equities asset class. Currency exposures held in other asset classes are effectively hedged by investment managers.

Currency risk (or foreign currency exchange risk) arises on financial instruments that are denominated in a foreign currency, that is, in a currency other than the functional currency in which they are measured. Currency risk does not arise from financial instruments that are non-monetary items or from financial instruments denominated in the functional currency. Examples of monetary items are cash, receivables and bonds (fixed amounts). Everything else is therefore non-monetary.

In consultation with JANA, the Board has made a judgement that a 10% weighted average movement in the Australian Dollar is considered reasonably possible for the 2011/2012 reporting period. The approach adopted to determine the volatility factor is based on the historical average movement in the annual absolute returns of the market benchmark for International Equities. This analysis assumes that all other variables, in particular interest rates and other market prices, remain constant. The analysis was performed on the same basis for 2010 and is not guaranteed.

A 10% strengthening/weakening of the Australian Dollar (AUD) against the relevant foreign currencies at 30 June would have increased/decreased the change for the year in net assets to pay benefits or the benefits accrued as a result of operations and net assets available to pay benefits by the amounts shown below:

Monetary financial instruments denominated in a foreign currency

Impact on net assets available to pay benefits

-10% +10%

30 June 2011 A$’000 A$’000 A$’000

USD 65,301 6,530 (6,530)

JPY 36,503 3,650 (3,650)

EUR 62,685 6,268 (6,268)

GBP 8,057 805 (805)

Other (24,650) (2,465) 2,465

Total 147,896 14,788 (14,788)

30 June 2010 A$’000 A$’000 A$’000

USD 75,312 7,531 (7,531)

JPY (209) (21) 21

EUR 20 2 (2)

GBP 7,381 738 (738)

Other 55,236 5,523 (5,523)

Total 137,740 13,773 (13,773)

Interest rate risk

Interest rate risk is that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Fund’s financial instruments directly exposed to interest rate risk are cash and cash equivalents, fixed interest securities and discount securities.

The Fund’s exposure to cash, cash equivalents, fixed interest securities and discount securities is measured against the target asset allocations on a weekly basis. Currently all cash assets are held with Tasmanian Public Finance Corporation (Tascorp), Perennial Investment Partners Limited (Perennial) and Westpac Banking Corporation Limited (Westpac). The adequacy of Tascorp, Perennial and Westpac is formally reviewed by the IC on an annual basis. Any change in a banking institution requires the approval of the Board.



Interest rate profile

The Fund holds investments in both domestic and offshore bond markets.

At the reporting date the interest rate profile of the Fund’s interest-bearing financial instruments was:

2011 $’000

2010 $’000

Cash and cash equivalents 411,307 401,027

Deposits held with brokers 521 1,458

Fixed interest 315,718 412,879

Discount securities 46,936 7,656

774,482 823,020

Sensitivity analysis – interest rates

In consultation with JANA, the Board has made a judgement that a 100 basis points movement in interest rates is considered reasonably possible for the 2011/2012 reporting period. The approach adopted to determine the volatility factor is based on the historical average movement in the annual absolute returns of benchmark 10-year Australian and US Government bonds. US Government bonds were used as proxy for offshore bond markets. This analysis assumes that all other variables, in particular foreign currency and other market prices, remains constant. The analysis was performed on the same basis for 2010 and is not guaranteed.

An increase/decrease of 100 basis points in interest rates at the reporting date would have increased/decreased the change for the year in net assets to pay benefits or the benefits accrued as a result of operations and net assets available to pay benefits by the amounts shown below. Fixed interest securities, by their nature, have no exposure to changes in interest rates. However, a change in interest rates will affect the fair value of fixed interest securities. If interest rates go up then the fair value of a fixed interest security will go down (less attractive to investors). And visa versa. As an estimate of this, a 100 basis points movement equates to a 5% fair value movement using yield curve.

Carrying amount

Impact on net assets available to pay benefits

-100 basis points

+100 basis points

30 June 2011 $’000 $’000 $’000

Cash and cash equivalents 411,307 (4,113) 4,113

Deposits held with brokers 521 (5) 5

Fixed interest 315,718 15,786 (15,786)

Discount securities 46,936 (469) 469

Total 774,482 11,199 (11,199)

30 June 2010

Cash and cash equivalents 401,027 (4,010) 4,010

Deposits held with brokers 1,458 (15) 15

Fixed interest 412,879 20,644 (20,644)

Discount securities 7,656 (77) 77

Total 823,020 16,542 (16,542)



Other market price risk

Other market price risk is that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.

All of the Fund’s financial instruments are carried at net market value with changes recognised in the Statements of Changes in Net Assets or Operating Statements. Accordingly, all changes in market conditions affecting net market value will be recognised in the Statements of Changes in Net Assets or Operating Statements. Investments of the Fund (other than cash held for liquidity purposes and investment properties) comprise of listed equities, unlisted equities, bonds, foreign exchange contracts, options and futures, direct properties and other investments. The Fund’s exposure to other market price risk is therefore limited to the market price movement of these investments. The Board has determined that these investments are appropriate for the Fund and are in accordance with the Fund’s investment strategy in respect of asset class allocation. The Fund’s exposure at year-end to other market price risk is detailed below.

In accordance with agreed investment mandates, some of the Fund’s external investment managers have invested in a variety of financial instruments, including derivatives which could expose the Fund’s investments to a variety of other market price risks. For investments in listed Australian equities, other market price risk arising on these investments is mitigated by the due diligence and research undertaken by the investment manager prior to purchasing or selling equities on behalf of the Fund. Further the Board monitors the value of all equity investments on a weekly basis through appropriate reporting from the investment managers.

Other market price risk is mitigated by constructing a diversified portfolio of instruments which are traded on various markets. All investment managers are subject to due diligence prior to being appointed with the recommendation for their appointment and removal made by the IC to the Board for final approval.

The Board monitors the Fund’s investment value on a weekly basis and receives monthly reports from all investment managers which detail performance against relevant benchmarks and objectives. Each quarter JANA provides the Board with a consolidated report on the performance of all the Fund’s investment managers against relative benchmarks and objectives including advice regarding the management of the Fund’s investment portfolio in accordance with the current investment strategy.

Sensitivity analysis – other market price risk

In consultation with JANA, the Board has acknowledged that the following movements in other market price risk are reasonably possible for the 2011/2012 reporting period:

Market risk Volatility Factor

Rationale

Australian equities 15% Average absolute annual returns on the Standard & Poor’s (S&P)/Australian Securities Exchange (ASX) 300 Accumulation Index

International equities 15% Morgan Stanley Capital International (MSCI) World Index ex Australia

Direct property 12% Average absolute annual returns of the Mercer Australia Unlisted Property Index

Infrastructure 12% Average absolute returns of long-running infrastructure mandates

Long/Short equities 15% Average absolute annual returns of the Hedge Fund Research Indices (HFRI) Equity Hedge Index

Absolute return 8% Average absolute annual returns of the HFRI Funds of Funds Composite Index



The increase/decrease in the market price against the investments of the Fund at 30 June 2011 would have increased/decreased the change for the year in net assets available to pay benefits or the benefits accrued as a result of operations and net assets available to pay benefits by the amounts shown below. This analysis assumes that all other variables, in particular interest rates and foreign currency, remains constant. The analysis was performed on the same basis for 2010 and is not guaranteed.

Volatility %

Carrying amount

Impact on results on financial position and impact on net

assets available to pay benefits

- +

30 June 2011 $’000 $’000 $’000

Australian equities 15% 1,570,639 (235,596) 235,596

International equities 15% 555,609 (83,341) 83,341

Direct property 12% 472,210 (56,665) 56,665

Infrastructure 12% 177,870 (21,344) 21,344

Total 2,776,328 (396,946) 396,946

30 June 2010

Australian equities 15% 984,869 (147,730) 147,730

International equities 15% 851,679 (127,752) 127,752

Direct property 12% 494,339 (59,321) 59,321

Infrastructure 12% 158,845 (19,061) 19,061

Absolute return 8% 50,565 (4,045) 4,045

Total 2,540,297 (357,909) 357,909

The following table summarises the aggregate notional principal of the futures and options contracts at 30 June 2011 and 2010.

Type of contract 2011 A$’000

2010 A$’000

Buy

Australian and International share price index futures – 16,526

Australian and International options – 1,098

Forward currency contracts 99,719 383,395

Total Buys 99,719 401,019

Sell

Forward currency contracts – –

Total Sells – –



Credit risk

Credit risk is that a counterparty to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Fund’s financial instruments being directly exposed to credit risk include cash and cash equivalents, mortgage receivables and other receivables.

The Board’s Instrument of Delegation and Operating Guidelines in respect to mortgage receivables is in place and the exposure to credit risk is monitored on an ongoing basis by the Direct Investments Unit. The Instrument of Delegation and Operating Guidelines provides the appropriate guidelines as to:

the approval of mortgage loans and construction finance loans;

reporting to the IC; and

actions taken on a mortgagor’s file.

The Fund does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into.

No financial assets are considered past due as all payments are considered recoverable when contractually due.

The carrying amount of those financial assets exposed to credit risk as at 30 June are as follows:

2011 $’000

2010 $’000

Cash and cash equivalents 411,307 401,027

Mortgage receivables 161,345 167,626

Other receivables 89,092 96,241

Investments receivables 5,273 4,522

667,017 669,416

As previously noted, substantially all of the cash held by the Fund is held with Tascorp, Westpac and Perennial. All funds invested with Tascorp are guaranteed by the sovereign State of Tasmania. Bankruptcy or insolvency by Westpac and Perennial may cause the Fund’s rights, with respect to the cash held to be delayed or limited. The Fund monitors its credit risk by monitoring the credit quality and financial position of the cash manager through research conducted and advice given by JANA.

The Board appoints specialist fund managers to manage the assets and risk associated with the funds allocated to that manager. For investments in listed equities and fixed interest investments, credit risk arising on these investments is mitigated by the due diligence and research undertaken by JANA prior to the Board’s appointment of the respective fund manager. In addition, each fund manager uses their specialist skills and research to evaluate the credit risk prior to purchasing or selling equities on behalf of the Fund. The investment strategy of the Fund restricts the level of equity investments which are not listed on a stock exchange.

Further, JANA provides a quarterly update to the IC on the investment performance and operational issues of each fund manager, which includes credit risk related areas.

Credit risk associated with contributions receivable and other receivables is considered low as there is usually a short settlement period due to the receivables relating to timing differences in respect of the receipt of contributions from the employer sponsor. The employer sponsor comprises the Tasmanian State Government owned agencies. The Board monitors the ageing of the contributions and receivables outstanding on a regular basis.

Unsettled investment sales are transactions with investment managers that are awaiting settlement. The credit risk relating to unsettled transactions is considered not significant due to the short settlement period involved and the high credit quality of the brokers used.

Approximately 80% (2010: 62%) of the Fund’s investments are held by the Fund’s custodian JP Morgan Worldwide Securities Services. Bankruptcy or insolvency of the custodian may cause the Fund’s rights with respect to securities held by the custodian to be delayed or limited. Management monitors its risk through research and advice from JANA regarding the credit quality and financial position of the custodian.



Impairment losses

The ageing of the Fund’s mortgage receivables at the reporting date was:

Gross Impairment Gross Impairment

2011 $’000

2011 $’000

2010 $’000

2010 $’000

Not past due 161,345 – 167,626 –

Past due 0-30 days – – – –

Past due 31-120 days – – – –

Past due 121 days to one year – – – –

More than one year – – – –

161,345 – 167,626 –

Liquidity risk

Liquidity risk is that the Fund will not be able to meet its financial obligations as they fall due. The Board’s approach to managing liquidity is to ensure, as far as possible, that there exists immediate cash resources available to meet projected liabilities as well as having sufficient liquid assets to meet requirements in excess of projections without incurring unacceptable losses or risking damage to the Fund’s reputation.

The Fund’s liquidity requirements are managed on a daily basis by the Board by reference to a projected cash flow report.

The Fund’s financial instruments include investments in unlisted investments, which are not traded in an organised public market and which generally may be illiquid. As a result, the Fund may not be able to liquidate quickly some of its investments in these instruments at an amount close to the fair value in order to meet liquidity requirements. The amount of these investments, which is typically represented by certain asset classes, is monitored to comply with the asset allocation stipulated in the Board’s investment strategy. As the Fund’s investment strategy is determined with consideration to liquidity issues and the Board monitors the Fund’s compliance to the investment strategy, liquidity risk is considered minimal.

The Fund’s listed securities are considered to be readily realisable as they are listed on recognised stock exchanges.

The Fund’s overall liquidity risks are monitored on a quarterly basis by the Board.

The following are the contractual maturities of financial liabilities, including interest payments and excluding the impact of netting arrangements:

Non-derivative financial liabilities Less than 1 month

1–3 months Greater than 3 months

Total

30 June 2011 $’000 $’000 $’000 $’000

Other payables 12,746 93,446 – 106,192

Contributions and pensions payable 8 – – 8

Contributions in advance – – 4,280 4,280

Vested benefits – – 8,170 8,170

Total 12,754 93,446 12,450 118,650

30 June 2010 $’000 $’000 $’000 $’000

Other payables 22,893 97,083 – 119,976

Contributions and pensions payable 1,245 – – 1,245

Contributions in advance – – 14,507 14,507

Vested benefits – – 7,792 7,792

Total 24,138 97,083 22,299 143,520



Derivative financial liabilities Less than 3 months

3–12 months 1-5 years Total

30 June 2011 $’000 $’000 $’000 $’000

Buy

Futures – – – –

Forward currency contracts 82,453 13,826 3,440 99,719

Total buys 82,453 13,826 3,440 99,719

Sell

Forward currency contracts – – – –

Total sells – – – –

30 June 2010

Buy

Futures 16,526 – 16,526

Forward currency contracts 127,571 329,331 456,902

Total buys 144,097 329,331 473,428

Sell

Forward currency contracts 12,635 60,871 73,506

Total sells 12,635 60,871 73,506

Vested benefits have been included in the greater than three months column, as this is the amount that members could call upon as at year-end. This is the earliest date on which the fund can be required to pay member vested benefits, however members may not necessarily call upon amounts vested to them during this time.

Estimation of fair values

The Fund’s financial assets and liabilities included in the statements of net assets or statements of financial position are carried at net market value which the Board believes approximates net fair value.

The major methods and assumptions used in determining net market value of financial instruments have been disclosed in the significant accounting policies section of each fund’s financial statements.

At 30 June 2011, the carrying amounts of investments which fair values were determined directly, in full or in part, by reference to published price quotations amounted to $3,219,075,037 (2010: $2,770,877,243).

The table below analyses financial instruments carried at net market value, which approximates fair value, by valuation method. The different levels have been defined as follows:

level 1 net market value measurements are those instruments valued based on quoted prices (unadjusted) in active markets for identical assets or liabilities.

level 2 net market value measurements are those instruments valued based on inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

level 3 net market value measurements are those instruments valued based on inputs for the asset or liability that are not based on observable market data (unobservable inputs).



Estimation of Fair Value Level 1 Level 2 Level 3 Total

30 June 2011 $’000 $’000 $’000 $’000

Equity Securities 1,472,220 1,203,160 53,564 2,728,944

Fixed Interest Securities – 139,524 52,644 192,168

Direct Property – 351,545 – 351,545

Derivative assets 239 7,341 161,345 168,925

1,472,459 1,701,570 267,553 3,441,582

Derivative liabilities – 1,142 – 1,142

1,472,459 1,700,428 267,553 3,440,440

Reconciliation of level 3 net market value measurements of financial assets Net market value $’000

Opening balance 191,909

Total Gains or Losses in profit or loss (11,130)

Sales/ Income (2,862)

Purchases 107,591

Issues –

Loan application 2,362

Principal reductions (8,642)

Settlements –

Transfers out of level 3 (14,350)

Transfers into level 3 2,675

Closing balance 267,553

Total gain or losses for the period included in profit or loss for assets held at the end of the reporting period (10,816)

Gains or losses included in profit or loss for the period are presented in changes in net changes in fair value of investments as follows:

Net changes in net market values of investments

Total gains or losses in profit or loss for the period (10,816)

Total gains or losses for the period included in profit or loss for assets held at the end of the period (10,816)



Estimation of Fair Value Level 1 Level 2 Level 3 Total

30 June 2010 $’000 $’000 $’000 $’000

Equity Securities 1,277,671 1,342,462 12,858 2,632,991

Direct Property – 139,746 – 139,746

Derivative assets 3,000 130,102 179,050 312,152

1,280,671 1,612,310 191,908 3,084,889

Derivative liabilities 746 14,872 – 15,618

1,279,925 1,597,438 191,908 3,069,271

Reconciliation of level 3 net market value measurements of financial assets Net market value $’000

Opening balance 196,903

Total Gains or Losses in profit or loss 2,880

Sales/ Income (1,587)

Purchases 7,170

Issues –

Loan application 10,994

Principal reductions (23,341)

Settlements (1,110)

Transfers into level 3 –

Closing balance 191,909

Total gain or losses for the period included in profit or loss for assets held at the end of the reporting period 3,430

Gains or losses included in profit or loss for the period are presented in changes in net changes in fair value of investments as follows:

Net changes in net market values of investments

Total gains or losses in profit or loss for the period 3,430

Total gains or losses for the period included in profit or loss for assets held at the end of the period 3,430

The net fair value of listed investments have been valued at the quoted market price at balance date adjusted for transaction costs expected to be incurred. For other assets and other liabilities the net fair value approximates their carrying value. No financial assets and financial liabilities are readily traded on organised markets in standardised form other than listed investments.

The aggregate net fair values and carrying amount of financial assets and financial liabilities are disclosed in the statements of net assets or statements of financial position and in the notes to the financial statements.



Appendix B Independent Audit Report


Appendix B Independent Audit Report (continued)


Appendix C AAS 25 Financial Reporting as at 30 June 2011

Mercer (Australia) Pty Ltd ABN 32 005 315 917 33 Exhibition Street Melbourne Vic 3000 GPO Box 9946 Melbourne Vic 3001 61 3 9623 5555 Fax +61 3 8640 0800 [email protected] www.mercer.com.au

This communication is prepared and sent by Mercer (Australia) Pty Ltd as a corporate authorised representative #260851 of, and on behalf of, Mercer Investment Nominees Limited ABN 79 004 717 533, AFS Licence #235906. 'MERCER' is a registered trademark of Mercer (Australia) Pty Ltd.

Mr Anthony Bellamy Retirement Benefits Fund Board 39 Sandy Bay Road HOBART Tasmania 7000 22 September 2011 Dear Tony

AAS 25 Financial Reporting as at 30 June 2011

As requested, please find attached the Accrued Benefits and Vested Benefits information required for accounting purposes under AAS 25.

Contributory Scheme, PSF and PRBF

The Vested Benefits must be updated each year, so the 2011 accounts need to show the Vested Benefits as at 30 June 2011. As we are calculating Vested Benefits at 30 June 2011 it is relatively straightforward to calculate Accrued Benefits at the same date. Therefore, for the Contributory Scheme, Parliamentary Superannuation Fund (PSF) and Parliamentary Retiring Benefits Fund (PRBF) the 2011 Accrued Benefits can be reported in this year’s accounts, with comparatives as at 30 June 2010. Appendix A contains the information required under AAS 25 for the Contributory Scheme, PSF and PRBF. The methodology and assumptions are shown in Appendix B and Appendix C.

TASSS and SFCSS

The Accrued Benefits for the Tasmanian Ambulance Service Superannuation Scheme (TASSS) and the State Fire Commission Superannuation Scheme (SFCSS) were last calculated as at 30 June 2009. When the Accrued Benefits are updated, the accounts must show the benefits which have accrued since the last measurement date, measured as the sum of the net change in Accrued


Appendix C AAS 25 Financial Reporting as at 30 June 2011 (continued)

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22 September 2011

Benefits and any benefit payments between the updated measurement date and the last measurement date. For the SFCSS and the TASSS, only the Accrued Benefits are shown in Appendix A. The methodology and assumptions are described in our triennial report on the actuarial review as at 30 June 2009. Yours sincerely,

David Knox Senior Partner



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22 September 2011

Appendix A: Information for the Financial Statements

Contributory Scheme

AAS 25 Accrued Benefits

The Accrued Benefits were valued at 30 June 2011 using the methodology outlined in Appendix B and the assumptions outlined in Appendix C, including a discount rate of 7.5% per annum. Based on these assumptions, the total Accrued Benefits for the Contributory Scheme (both funded and unfunded components) as at 30 June 2011 for the purposes of AAS 25 was calculated to be $5,513 million (net of contributions surcharge). Of this amount $1,632 million has to be met from the Scheme’s assets. The weighted average term of the accrued liabilities (weighted according to discounted values) for the Contributory Scheme was 19 years as at 30 June 2011.



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22 September 2011

AAS 25 Vested Benefits as at 30 June 2011 The total value of Vested Benefits (funded and unfunded share) as at 30 June 2011 in respect of current and former members together with the Vested Benefits as at 30 June 2011 are set out in the table below. The Vested Benefits at 30 June 2011 have been calculated using a discount rate of 7.5% per annum.



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22 September 2011



The Accrued Benefits were valued at 30 June 2011 using the methodology outlined in Appendix B and the assumptions outlined in Appendix C, including a discount rate of 8% per annum. Based on these assumptions, the total Accrued Benefits (both funded and unfunded components) as at 30 June 2011, for the purpose of AAS 25, was calculated to be $16.245 million (net of contributions surcharge). Of this amount $4.386 million has to be met from the Fund’s assets. The weighted average term of the liabilities (weighted according to discounted values) for the Parliamentary Superannuation Fund was 12 years as at 30 June 2011.

AAS 25 Vested Benefits as at 30 June 2011 The total value of Vested Benefits as at 30 June 2011 in respect of current and former Members of the Fund together with the Vested Benefits as at 30 June 2010 are set out in the table below. The Vested Benefits at 30 June 2011 have been calculated using a discount rate of 8% per annum.



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22 September 2011



The Accrued Benefits were valued at 30 June 2011 using the methodology outlined in Appendix B and the assumptions outlined in Appendix C, including a discount rate of 7% per annum. Based on these assumptions, the total Accrued Benefits as at 30 June 2011, for the purposes of AAS 25, was calculated to be $4.595 million (net of the contributions surcharge). The weighted average term of the liabilities (weighted according to discounted values) for the Parliamentary Retiring Benefits Fund was 6 years as at 30 June 2011.

AAS 25 Vested Benefits as at 30 June 2011 The total value of Vested Benefits as at 30 June 2011 in respect of current Members of the Fund is set out in the table below.

The Vested Benefits are not affected by the discount rate because they are not discounted.



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22 September 2011

State Fire Commission Superannuation Scheme


The Accrued Benefits were last valued at 30 June 2009 using the methodology outlined in the report on the defined benefit liabilities of the Retirement Benefits Fund as at 30 June 2009 using a discount rate of 7% per annum. Based on these assumptions, the total Accrued Benefits as at 30 June 2009 for the purposes of AAS 25, was calculated to be $49.2 million. The weighted average term of the liabilities (weighted according to discounted values) for the State Fire Commission Superannuation Fund was 11 years as at 30 June 2009. The accounts must show the benefits which have accrued between 31 March 2009 and 30 June 2009, measured as the sum of the net change in Accrued Benefits and any benefit payments between the updated measurement date and the last measurement date. The net change in Accrued Benefits was -$7.458 million.



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22 September 2011



The Accrued Benefits were valued at 30 June 2009 using the methodology outlined in the triennial investigation on the defined benefit liabilities of the Retirement Benefits Fund as at 30 June 2009, including a discount rate of 7% per annum. Based on these assumptions, the total Accrued Benefits as at 30 June 2009, for the purposes of AAS 25, was calculated to be $27.833 million. The weighted average term of the liabilities (weighted according to discounted values) for the Tasmanian Ambulance Service Superannuation Scheme was 9 years as at 30 June 2009. The accounts must show the benefits which have accrued between 31 March 2009 and 30 June 2009, measured as the sum of the net change in Accrued Benefits and any benefit payments between the updated measurement date and the last measurement date. The net change in Accrued Benefits was -$2.036 million.



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Appendix B: Summary of valuation methodology

Methodology for Accrued Benefits

The accrued benefit liability represents the present value of all future benefits payable to the extent that they relate to service completed prior to the valuation date. The valuation of the accrued benefit liability has a number of stages as follows:

Stage 1 Economic and demographic assumptions are made about the future.

Stage 2

Using these assumptions, the value of all future benefits payable from each scheme is calculated year by year until the last of the members as at the valuation date leaves the scheme.

Stage 3 Each future benefit payable is apportioned between the funded and unfunded components (where relevant) and between past and future service. That part which relates to past service (i.e. prior to the valuation date) is known as the “accrued” benefit.

Stage 4

The accrued benefits are discounted to the valuation date, based on their expected payment dates (based on the demographic assumptions) and the assumed rate of future investment returns.

The method of apportioning benefits between past and future service is as follows:

Where the benefit is calculated by reference to a multiple, the past service component is equal to the total benefit multiplied by the following ratio:

Accrued Multiple at Valuation Date Multiple used in Benefit Calculation



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Where the benefit is calculated by reference to one or more account balances (eg leaving service benefits in the SFCSS), the past service component of that benefit is equal to the relevant account balance at the valuation date with interest to the expected future date of benefit payment. In all cases, allowance is made for future salary growth and increases in vesting to the assumed date of exit.

For CON, PSF and PRBF the accrued benefits liability has not been subjected to a minimum of vested benefits. For SFCSS and TASSS, the accrued benefits liability at 30 June 2009 has not been subjected to a minimum of vested benefits but the accrued benefits liability at 31 March 2009 has been subjected to a minimum of vested benefits at an individual member level. This change was made as part of the most recent actuarial investigation for each scheme. Surcharge is deducted at an aggregate level. The unfunded component of each benefit in the CON scheme is calculated as the employer share of the Basic Benefit (ie the benefit which would be paid had the member always contributed at the rate of 5% of salary). The funded component is calculated as the balance of the benefit. In respect of Compulsory Preserved members, the additional value of any anti-detriment option available is allocated to the funded component.

Methodology for Vested Benefits

Contributory Scheme

The method for calculating Vested Benefits for each type of member is set out below.

Vested Benefit

Contributory member Their current accrued benefit factor multiplied by their current final average salary.

Pensioners The present value of their pension and where applicable their contingent spouses pension.

Compulsory Preserved member The face value of their Compulsory Preserved account.

No additional allowance has been made in respect of the anti-detriment provisions relating to pre 1 July 1994 members.



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The method for calculating Vested Benefits for each type of Member is set out in the table below:

Vested Benefit

Contributory member The present value of their current pension entitlement percentage based on service multiplied by their Final Salary.

Pensioners The present value of their pension and where applicable their contingent spouses pension.


As all Members have completed at least eight years’ service as at 30 June 2011, the Vested Benefit is equal to the retirement benefit.



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Appendix C: Summary of valuation assumptions

Contributory Scheme

In order to value the liabilities of the RBF Contributory Scheme, we must make a number of assumptions being:

• financial;

• demographic; and

• expense assumptions By using long-term assumptions, the basis is expected to remain relatively stable over a long period of time. The assumptions are reviewed triennially and were last updated as part of the most recent actuarial investigation as at 30 June 2010. The updated assumptions, referred to below as the “2011 Assumptions”, were used to calculate the Accrued Benefits and the Vested Benefits at 30 June 2011. These differ from the assumptions used to calculate Accrued Benefits and Vested Benefits for AAS25 purposes at 30 June 2010 (the 2010 Assumptions) as these calculations were undertaken prior to completing the actuarial investigation.

Assumption % per annum

Discount rate 7.5

Salary inflation (inclusive of promotional increases) 4.5

Rate of increase in AWOTE 4.5

Rate of pension increases (CPI) 2.5



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Demographic Assumptions

These are the rates which members are assumed to resign, retire, die or become disabled and which pensioners are assumed to die. The main demographic assumptions used for valuing the Contributory Schemes liabilities are shown in the table below.

Contributory members 2011 Assumption

Rates of Retirement 55: 15%

56-59: 10%

60: 20%

61-62: 15%

63-64: 20%

65-69: 30%

70: 100%

Rates of Death Male: 40% of ALT 2005-07

Female: 50% of ALT 2005-07

Rates of Invalidity 50% of 2010 assumptions (see table below)

Rates of Resignation 2010 assumptions (see table below)

Rates of Redundancy 2010 assumptions (nil)

Pensioners 2011 Assumption

Rates of death Retirees: 2010 assumptions

Spouses: 85% of Australian Life Tables 2005-07 up to age 85 and

increasing to 100% by age 100.

Invalids: 2010 assumptions

Rates of improvement in

pensioner mortality

2010 assumptions



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Other Assumptions

The other assumptions used for valuing the RBF Contributory Scheme liabilities are shown in the table below.

Feature 2011 Assumption

Preservation age 55

Interim spouse pension on death 85% of Contributory members are married at the time of

their death and their widow/widowers will receive 3 months

pension payments at 75% of salary

Contributory members’ anti-detriment

retirement pension option

70% of eligible Contributory members are assumed to take

the anti-detriment pension option on retirement

Compulsory Preserved benefits anti-

detriment retirement pension option

For those members who have given notice of their intention

to preserve their complete entitlement, we assume 70% will

take the anti-detriment pension on retirement

Pensioners:

Age difference of spouse

Males are 3 years older than their spouse

Pensioners:

Marital status

As the pensioner’s marital status is only recorded on

commencement of pension, pensioners retain this initial

marital status during their entire remaining lifetime

Sample demographic rates for Contributory Scheme members Rates of mortality, invalidity and resignation are expressed as the number of members leaving per 100,000 members at each age:

Age Resignation Death Invalidity

Male Female

20 4,620 30 14 30

25 5,580 33 15 44

30 4,200 38 19 65

35 3,180 45 27 90

40 2,160 58 40 130

45 1,740 82 62 195

50 1,320 121 94 390

55 - 182 136 500

60 - 288 218 500



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Sample demographic rates for pensioners

The table below sets out the number of pensioners per 1,000 assumed to die during each year at selected ages, along with the assumed rates of improvement.

Retiree Invalid Spouse % Improvement

per annum

Age Male Female Male Female Female Male Male Female

55 1.9 1.5 4.5 2.7 3.9 2.3 3.21 2.45

60 3.4 2.2 7.2 4.4 6.1 3.7 3.34 2.52

65 5.7 4.1 12.0 6.8 10.2 5.8 3.29 2.52

70 10.8 6.2 19.2 11.2 16.3 9.5 3.08 2.45

75 22.4 13.9 33.1 19.8 28.2 16.9 2.73 2.30

80 43.5 28.7 57.6 36.6 49.0 31.1 2.21 2.07

85 83.6 66.5 99.1 70.9 84.2 60.3 1.61 1.62

90 153.3 112.5 162.9 130.9 146.6 117.9 1.07 1.03

95 243.9 220.8 231.1 209.0 219.5 198.5 0.78 0.67

100 331.9 317.5 282.1 282.8 282.1 282.8 0.51 0.47


Financial assumptions

The assumptions used to value the PSF were last updated as part of the 2010 actuarial investigation. The financial assumptions are shown in the table below:


Discount rate 8.0

Salary inflation

(inclusive of promotional increases)

4.0

Rate of pension increases (in line with

CPI)

2.5



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Demographic assumptions

These are the rates which Members are assumed to resign, retire, die or become disabled and which pensioners are assumed to die. Detailed tables of these assumptions are attached at the end of this Appendix. A brief summary of the demographic assumptions is set out in the table below:

Contributory Members Assumption

Rates of Retirement Assume 100% retire at age 70

Rates of Death As per CON Scheme 2011 assumptions

Rates of Retirement due to ill Health As per CON Scheme 2011 assumptions

Rates of re-election It is assumed 35% of all Members will not be re-elected at

each election. Elections are assumed to be held over a 4

year term for the House of Assembly and a 6 year term for the

Legislative Council

Pensioners 2011 Assumption

Rates of death Retirees: 2010 assumptions

Spouses: 85% of Australian Life Tables 2005-07 up to age 85 and

increasing to 100% by age 100.

Invalids: 2010 assumptions

Rates of improvement in

pensioner mortality

Improvement factors from ALT 2005-07, based on the last 25 years

experience

Some of the benefits under the plan are optional, for example commutation of the pension to a lump sum, or are only payable if the Member is married, for example the spouse’s pension. We therefore have to make additional assumptions in order to value these benefits. A brief summary of these additional assumptions are set out in the table below:



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Feature Assumption

Members:

Marital Status

Assume all Members are married and will still be married

when they retire or die

Members:


Assume males are 3 years older than their spouse

Members:

Commutation of pension to lump sum

Assume none of the pension is commuted to a lump sum

Pensioners:


Assume males are 3 years older than their spouse

Pensioners:

Marital status

Assume that pensioners who are currently married will

still be married at death

Sample tables of rates

Rates of mortality and invalidity are expressed as the number of Members leaving as a result of these causes per 1,000 members at each age:

Age Death Invalidity

Male Female

55 182 136 500

60 288 218 500

The table below sets out the number of pensioners per 1,000 assumed to die during each year at selected ages, along with the assumed rates of improvement.

Retiree Invalid Spouse % Improvement

per annum

Age Male Female Male Female Female Male Male Female

55 1.9 1.5 4.5 2.7 3.9 2.3 3.21 2.45

60 3.4 2.2 7.2 4.4 6.1 3.7 3.34 2.52

65 5.7 4.1 12.0 6.8 10.2 5.8 3.29 2.52

70 10.8 6.2 19.2 11.2 16.3 9.5 3.08 2.45

75 22.4 13.9 33.1 19.8 28.2 16.9 2.73 2.30

80 43.5 28.7 57.6 36.6 49.0 31.1 2.21 2.07

85 83.6 66.5 99.1 70.9 84.2 60.3 1.61 1.62

90 153.3 112.5 162.9 130.9 146.6 117.9 1.07 1.03

95 243.9 220.8 231.1 209.0 219.5 198.5 0.78 0.67

100 331.9 317.5 282.1 282.8 282.1 282.8 0.51 0.47



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The assumptions used to value the PRBF were last updated as part of the 2010 actuarial investigation.

Financial Assumptions

The financial assumptions are shown in the table below:


Discount rate 7.0

Salary inflation

(inclusive of promotional increases)

4.0

Demographic assumptions

These are the rates which Members are assumed to resign, retire, die or become disabled. A brief summary of the demographic assumptions is set out in the table below:

Assumption

Rates of retirement Assume 100% retire at age 70

Rates of death As per CON Scheme 2011 assumptions

Rates of retirement due to ill health As per CON Scheme 2011 assumptions

Rates of re-election It is assumed that 35% of all Members will not be re-

elected at each election and that elections are held every 4

years for the House of Assembly and every 6 years for the

Legislative Council

Sample tables of rates

Rates of mortality and invalidity are expressed as the number of Members leaving as a result of these causes per 1,000 members at each age:

Age Death Invalidity

Male Female

55 182 136 500

60 288 218 500


The investments of the Fund are managed by the following investment managers:

2011 $’000

2010 $’000

452 Capital Pty Ltd – 174,652

Alliance Bernstein Investment Management Ltd – 136,055

AMP Capital Investors Ltd 238,893 205,638

Apostle Asset Management Ltd 35,995 33,752

Babson Capital Management LLC 49,030 –

Capital International Inc 222,531 212,559

DAF Global PST 4,392 5,450

Elizabeth Plaza – 6,554

Fauchier Partners Management Ltd 66,081 60,690

Gresham Property Funds Management Ltd 926 1,871

Harding Loevner LP 156,488 –

Hastings Funds Management Ltd 234,192 205,799

Independent Franchise Partners LLP 108,044 98,095

Invesco Australia Ltd 56,862 44,940

Lend Lease Real Estate Investments Ltd 199,812 195,602

Maple-Brown Abbott Ltd 268,200 270,483

Mesirow Financial Holdings Inc 1,471 (538)

Perennial Investment Partners Ltd 102,829 120,744

PIMCO Australia Ltd 186,901 104,585

Schroder Investment Management Australia Ltd 201,579 –

State Street Global Advisors Australia Ltd – 15,371

Solaris Investment Management Pty Ltd 209,019 186,752

Super Loans Trust 7,376 6,962

Tasmanian Public Finance Corporation 255,612 295,865

Tribeca Alpha Plus 88,067 78,627

Macquarie Goodman Wholesale Fund 26,331 24,551

GMO Australia Ltd. 60,558 57,898

Baillie Gifford Overseas Ltd 83,626 65,516

Goldman Sachs Global Fund – 11

Pzena Investment Management LLC 91,651 89,212

TGC Holdings 113,821 98,485

Transition – 3

Transition International Equities – 56

Triplepoint 54,340 50,565

Macquarie RVG 51,951 53,711

Brandywine Global Investment Management LLC 158,670 142,370

Paradice Investment Management Pty Ltd 221,736 182,645

Westpac Banking Corporation Limited 83,474 31,885

Commonwealth Bank of Australia – 7,900

Internally Managed Property and Mortgages 210,010 202,483

3,850,468 3,467,799

Appendix D Investment Managers as at 30 June 2011


Appendix E Individual agency balance sheet results as at 30 June 2011

These figures have been prepared for the individual agencies in setting their accounting provision for superannuation liabilities under the RBF in accordance with AASB119 “Employee Benefits” as at 30 June 2011, using a net of tax discount rate of 5.50%.

Total defined benefit obligation

$’000

Contributory Scheme assets

$’000Deficit/(Surplus)

$’000

Aurora Energy Pty Ltd 107,998 22,737 85,261

Ben Lomond Water 3,673 666 3,007

Cradle Mountain Water 1,086 208 878

Forestry Tasmania 154,723 32,269 122,454

Housing Tasmania 12,468 – 12,468

Hydro-Electric Corporation 393,427 73,708 319,719

Metro Tasmania Pty Ltd 24,292 4,898 19,394

Motor Accidents Insurance Board 3,852 547 3,305

Onstream Water 462 123 339

Port Arthur Historic Site Management Authority 6,985 1,121 5,864

Public Trustee 12,669 2,353 10,316

Retirement Benefits Fund Board 20,257 4,481 15,776

Tasmanian Irrigation Schemes Pty Ltd 412 85 327

Southern Water 6,530 1,195 5,335

Transend Network Pty Ltd 59,943 13,297 46,646

TT Line Company Pty Ltd 5,670 1,020 4,650

University of Tasmania 10,868 1,905 8,963

Tasmanian Racing Board 3,614 357 3,257

Total (1) 828,929 160,970 667,959

(1) Small differences in totals may arise due to rounding.


Notes


RB

F140

48_R

BF

Ann

ual R

epor

t 201

1

AL/R/00090 (V10-10/11)

Contacting RBFContact RBF if you would like additional information or assistance.

RBF Enquiry Line:

1800 622 631 or +61 3 8687 1863 (international)

Visit: www.rbf.com.au

Fax: (03) 9245 5827 or +61 3 9245 5827 (international)

Write: RBF, Reply Paid 446, Hobart TAS 7001

Office: 39 Sandy Bay Road, Hobart

Level 1, 87 George Street, Launceston

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